The Fair Trade Commission plans to warn the Japanese unit of global semiconductor giant Intel Corp. to stop business practices that the watchdog considers anti-competitive, sources close to the commission said.

Intel Japan K.K. is suspected of giving rebates to buyers of its central processing units (CPU) on condition that the manufacturers refrain from purchasing products of Intel rivals.

The FTC apparently decided the actions by the company, which dominates the CPU market for personal computers, were intended to shut out rival products, thereby limiting fair competition in violation of the Anti-Monopoly Law, sources said.

Intel is under investigation by the European Union's anti-monopoly watchdog for similar conduct.

Business analysts said the planned warning from the FTC could touch off severe competition and affect Intel's global business strategy.

An anti-monopoly action against Intel would be the second by the FTC against a global giant, following a formal warning to the U.S. computer software company Microsoft Corp. last July.

The commission found a contract required for Japanese licensees of Microsoft's Windows operating systems to be anti-competitive and ordered Microsoft to stop using the contract.

The issue in the Intel case is its requirement that personal computer makers, including NEC Corp., Fujitsu Ltd., Sony Corp. and Toshiba Corp., in exchange for rebates promise not to do business with rival CPU makers, especially Advanced Micro Devices Inc. (AMD) of the United States. Intel also offered rebates to computer makers that kept purchases of CPUs made by other companies below certain levels, sources said.

Some companies went along with Intel's offer and ceased to purchase from AMD and other semiconductor makers, sources said.

AMD's Athlon microprocessors are in competition with Intel's Pentium series.

According to market research company IDC Japan, 89 percent of personal computers contained Intel's CPU in 1998 but the ratio fell to 82.4 percent in 1999 and to 77.9 percent in 2002 because of AMD's advances.

In 2003, the percentage surged back to 84.5 percent.

Intel denies its business practice violates the Anti-Monopoly Law.

Intel opened its Japan unit in 1976 and became a household name through its TV commercials with the phrase ``Intel haitteru'' (``Intel inside'') and by ensuring Intel logos were placed on computers.(IHT/Asahi: February 7,2005)