The Federal Trade Commission (FTC) sued Intel on Wednesday, alleging that the microprocessor giant has "stifled competition" and "strengthened its monopoly" by making deals with PC makers that "put the brakes on superior competitive products." The action follows a year-long investigation into Intel's business practices.

"Intel has engaged in a deliberate campaign to hamstring competitive threats to its monopoly," said FTC Director Richard A. Feinstein. "It's been running roughshod over the principles of fair play and the laws protecting competition on the merits."

The FTC lawsuit comes on the heels of a $1.25 billion settlement Intel made with its number one competitor, AMD. This settlement was intended to cover damages Intel caused AMD from both antitrust and patent claim angles. But it didn't resolve antitrust investigations against the chip giant in the United States, Europe, or Asia.

Most important to the FTC, Intel's settlement didn't resolve what it sees as a future issue for the chipmaker: its recent forays into graphics chipsets. Part of the reason for the lawsuit is that the FTC would like to prevent Intel from further illegal expansion of its monopoly into the market for graphics chipsets. This aspect of the lawsuit impacts AMD—which owns graphics chipset maker ATI—as well as NVIDIA and other companies.

Intel tried to settle with the government but refused to meet the FTC's demands, which it said would harm its business. The trial could start as soon as September 2010, and legal experts are now expecting a protracted, Microsoft-style legal battle