EC fines Qualcomm £873 million for Apple exclusivity kickbacks

January 24, 2018 | 11:21

Tags: #antitrust #financial #fine #law #legal #margrethe-vestager #monopoly

Companies: #apple #european-commission #qualcomm

The European Commission has handed down a €997 million (around £873 million) fine to chip giant Qualcomm for what it claims was clear abuse of its dominant position in the mobile baseband market, following a complaint filed by Apple.

Apple's campaign against baseband chip supplier Qualcomm began in January 2017 with a complaint to the US Federal Trade Commission, followed by US and Chinese lawsuits. While Qualcomm counter-sued the company, the formal investigations by the monopoly watchdogs of various nations rolled on - and now the European Commission has found Qualcomm guilty of antitrust abuse.

'Qualcomm illegally shut out rivals from the market for LTE baseband chipsets for over five years, thereby cementing its market dominance. Qualcomm paid billions of US Dollars to a key customer, Apple, so that it would not buy from rivals,' Commissioner Margrethe Vestager explained in a press briefing following the ruling. 'These payments were not just reductions in price – they were made on the condition that Apple would exclusively use Qualcomm's baseband chipsets in all its iPhones and iPads.

'This meant that no rival could effectively challenge Qualcomm in this market, no matter how good their products were. Qualcomm's behaviour denied consumers and other companies more choice and innovation – and this in a sector with a huge demand and potential for innovative technologies. This is illegal under EU antitrust rules and why we have taken today's decision.'

The Commission has found that Qualcomm's payments to Apple to guarantee use of only Qualcomm parts - described as 'significant amounts', with Apple pointing to £800 million in promised-but-unpaid kickbacks alone in its US lawsuit against the company - 'had a significant detrimental impact on competition[,] excluded rivals from the market and deprived European consumers of genuine choice and innovation'.

For the infringement, which the Commission has claimed took place over a five and a half year period, the Commission has set a fine of €997,439,000 (around £873 million), or roughly five percent of Qualcomm's turnover in 2017. A separate investigation into claimed predatory pricing, meanwhile, is ongoing. Full details of the case can be found on the EC Competition website.

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