EU Fines Qualcomm $1.23B Over Exclusivity Deal With Apple

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The European Commission on Wednesday fined Qualcomm €997 million ($1.23 billion), concluding that the San Diego, California-based tech giant abused its dominant position in the chip market by paying Apple “billions of dollars” to only use its own baseband chipsets in its iPhone and iPad-series devices. Besides the fine that’s the third largest such sanction in the history of the political block behind the penalties given to Intel in 2009 and Google in 2017, the antitrust watchdog of the EC ordered Qualcomm to refrain from such practices in the future, as well as avoid any other activities that would yield similar anti-competitive results. Competition Commissioner Margrethe Vestager said the regulator’s in-depth probe revealed Qualcomm prevented its rivals from competing in the 4G LTE-enabled mobile baseband chip market for over half a decade, having resorted to such practices to additionally strengthen its already dominant position in the industry, ultimately hurting other businesses and consumers. The investigation into Qualcomm’s deal with Apple started in 2015.

Qualcomm’s fine was calculated based on the gravity and duration of its infringement, with the EC finding the firm was abusing its market position in the manner described above for over five and a half years. The total amount of the penalty represents 4.9 percent of Qualcomm’s 2017 turnover, with the sanction being based on the Article 54 of the EEA Agreement and Article 102 of the Treaty on the Functioning of the European Union. Qualcomm was in violation of the two legislatures in a period between 2011 and 2016, according to the regulator’s findings. Qualcomm and Apple are presently leading heated legal battles across the globe revolving around the former’s patent licensing practices and standard-essential patents in particular. The Cupertino, California-based iPhone maker claims Qualcomm’s licensing policies are predatory and allow the firm to bully its clients into paying it for patents it had nothing to do with, referring to the firm’s business model that calculates patent royalties on a per-device basis. The defendant repeatedly denied all such allegations, stating its inventions enabled the contemporary smartphone revolution.

The chipmaker is presently involved in another public clash with semiconductor giant Broadcom that’s trying to acquire it as part of a hostile takeover, offering $105 billion for the company. If completed, the deal would be by far the largest acquisition in the history of the tech industry, yet Qualcomm argues the offer significantly undervalues it and comes with massive regulatory scrutiny concerns that make it unwilling to haggle with Broadcom under any circumstances. Broadcom is presently trying to replace Qualcomm’s board with its own nominees willing to greenlight the sale of the firm at the chipmaker’s annual shareholder meeting scheduled to take place on March 6th.