Intel is accused of forcing computer makers to use its chips

Intel, the world's biggest maker of computer chips, is being sued by a US competition authority.

The Federal Trade Commission (FTC) has accused the company of using its market dominance to squash competitors and prevent innovation.

It said Intel had deliberately tried to "hamstring" its smaller competitors.

Intel said the FTC's case was "misguided". The FTC's move comes a month after the New York attorney general launched a similar lawsuit.

In that case, New York attorney general Andrew Cuomo accuses Intel of using "illegal threats" to dominate microchip sales.

This is clearly a good day for [Intel's rival] Advanced Micro Devices, there's no question about it

Peter Kenny, Knight Equity Markets

Last month Intel also reached a $1.25bn (£770m) settlement with rival Advanced Micro Devices to end an anti-competition legal dispute between the two firms.

'Hamper competition'

Shares in AMD rose 5.2% on news of this latest action, while Intel dropped 0.7%.

"This is clearly a good day for Advanced Micro Devices, there's no question about it," said analyst Peter Kenny of Knight Equity Markets.

Intel is also appealing against a record $1.45bn anti-competition fine from European regulators.

The FTC said it is asking for an order that would bar Intel from using "threats, bundled prices, or other offers to encourage exclusive deals, hamper competition, or unfairly manipulate the prices of its" chips.

It accuses Intel of using both threats and rewards to keep some of the biggest computer makers from buying other companies' chips or marketing computers that carried them.

The complaint names Dell, Hewlett-Packard and IBM as Intel's targets.