North American chipset designer, Qualcomm, has promised to fight the $865 million fine that the Korea Fair Trade Commission sanctioned against the business following an investigation to alleged unfair business practices. This fine is the highest that the Korea Fair Trade Commission (KFTC) has ever given a single company and is because Qualcomm forced smartphone manufacturers to sign what it considers to be unfair license agreements by linking Qualcomm’s System-on-Chip designs with patent license contracts. The KFTC’s investigation took six months and involved seven hearings with a number of companies, including both South Korean smartphone manufacturers LG and Samsung, plus other technology businesses including chipset designers Apple, Intel, NVIDIA and MediaTek, amongst others. The Korean regulatory body decided that chipset market leader Qualcomm forced unfair arrangement with companies, such as requiring them to provide patents to Qualcomm for free and without offering a fair compensation calculation system.
Qualcomm have labelled the Korean Fair Trade Commission’s decision and fine “unprecedented and insupportable,” because the company has used similar licensing arrangements to others in South Korea (and elsewhere) “for decades.” The chipset designer will file for an immediate stay and appeal at the Seoul High Court as soon as the KTFC’s written decision and order is issued, which may take up to six months. Qualcomm are optimistic that the Seoul High Court’s reputation to “apply sound antitrust principles” will be beneficial to their appeal. Qualcomm stated that they believe the KFTC’s decision contravenes the Korea-U.S. Free Trade Agreement, which promises a due rights process for American businesses operating in South Korea. This process includes the right for Qualcomm to cross examine witnesses called in the case, which the American business says it was unable to do so during the six month investigation.
Furthermore, the KFTC’s actions could alter the established patent and licensing practices that have been in use for many years. This is certainly not the first time Qualcomm has been investigated for alleged antitrust business practices, and each time the company has vigorously defended its position. The company received one of the biggest fines ever given for unfair business practices in the summer of 2015 where, after a fourteen month investigation, Chinese authorities levied a fine of approximately $1 billion. And whilst the KFTC have reached a decision, it seems that this dispute will rumble on into 2017.