EC hands Qualcomm a £218m fine over baseband monopoly

July 19, 2019 | 10:54

Tags: #anticompetitive #antitrust #baseband-processor #fine #legal #margrethe-vestager #modem #monopoly #semiconductor

Companies: #apple #european-commission #icera #intel #qualcomm

The European Commission has completed its investigation into Qualcomm's dominance of the cellular baseband chipset market, and has found it guilty of abusing its position - and has given it a £218 million fine for its troubles.

Qualcomm has long stood accused of using monopolistic tactics to retain a stranglehold on the cellular modem and baseband processor market: In January 2017 Apple sued Qualcomm over payments it claimed to have been promised for using Qualcomm parts in its iPhone and cellular iPad models, and was in turn sued by Qualcomm over claims it had reduced the performance of Qualcomm parts to make Intel's equivalents seem faster and had provided Intel with confidential Qualcomm data. The US Federal Trade Commission launched its own investigation into the company in January 2017 too, after Qualcomm was hit with a £664 million fine in South Korea for having failed to licence its essential patents under fair, reasonable, and non-discriminatory (FRAND) terms. In May this year the FTC concluded that Qualcomm was indeed guilty of abusing its position, and now the European Commission has followed suit.

In a report published this week, the European Commission found that Qualcomm did indeed hold a dominant position in the cellular baseband chipset market between 2009 and 2011 - a 60 percent market share, three times that of its closest competitor - and abused that dominance through 'predatory pricing' which saw it sell parts below cost to Huawei and ZTE. That pricing, the EC claims, had no justification beyond an attempt to force rival Icera out of business.

'Baseband chipsets are key components so mobile devices can connect to the Internet. Qualcomm sold these products at a price below cost to key customers with the intention of eliminating a competitor,' explains Commissioner Margrethe Vestager. 'Qualcomm's strategic behaviour prevented competition and innovation in this market, and limited the choice available to consumers in a sector with a huge demand and potential for innovative technologies. Since this is illegal under EU antitrust rules, we have today fined Qualcomm €242 million.'

That fine, representing 1.27 percent of the company's 2018 turnover, is considerably lighter than the last levied by the EC against Qualcomm: Back in January 2018 the EC fined the company £873 million for having paid Apple to use Qualcomm parts exclusively, shutting out its rivals from the market. The legal action between Apple and Qualcomm, meanwhile, was dropped in April this year after favoured alternate supplier Intel - which had accused Qualcomm of anticompetitive behaviour itself - announced it was to exit the modem market altogether.

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