Intel, the world's biggest chip manufacturer, stands accused of using its power as a microprocessor producer to bully other high-tech companies.

The California-based company makes the microprocessors that power four out of five PCs.

Intel is one of two dominant companies that sells to PC manufacturers - the other is Microsoft - which is already facing charges of anti-competitive behaviour.

Last week worries about Intel's earnings and the court case hit their share price.

Power games

The FTC's case is believed to focus partly on how Intel acted against Intergraph, a personal computer-maker that uses Intel chips in its machines.

It is said to have cut off vital information Intergraph needed, during a dispute between the companies.

Andrew Grove: Founder of Intel

There were similar allegations made about the way Intel acted towards computer parts maker Digital Equipment.

It was accused of threatening to stop supplying chips to Digital after the company took it to court for allegedly infringing Digital patents in the design of Pentium chips.

The dispute was settled in April, when Intel agreed to purchase Digital's microprocessor assets.

Intel meanwhile argues it had to protect its intellectual property from legal foes.

"If the disputes are contained within that relationship, they have no significant competitive impact," Richard Gilbert, an economics profressor at the University of California.

"The conduct that is alleged is not unusual in a licensing arrangement. The question is whether it affects competition generally, and I have not heard anyone make a good case yet."

Monopoly claims

Intel is expected to argue that individual transactions with its microprocessor customers have not harmed the competition and that its customers are free to buy the chips from its rivals.

Bill Gates: Microsoft is already facing an antitrust action

The firm admits it has a dominant position in the marketplace, but is likely to maintain that unlike a monopoly it does not control prices.

The FTC will try to suggest that Intel does control the market through its technology, which is a standard in the PC industry.

Intel chips and Microsoft Windows operating system software form the "Wintel" combination found in the vast majority of PCs.

SoundView Financial analyst Scott Randall said, "There is a doctrine called crucial technology.

"If you have significant control over the market and there are crucial technologies that you control, that can prevent competitors from entering."

Tough times

Ironically, the lawsuit comes at a time when Intel is going through one of its toughest times in over a decade.

The company's profit margins are under pressure from tumbling PC prices and it has been forced to cut prices more often in a cut-throat PC market.

It has announced plans to cut 3,000 jobs, its biggest job cuts in over a decade.

The company forecast flat revenues for the second quarter, but analysts have been worried the company will not meet Wall Street expectations due to the sluggish PC market.