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FTC Drops The Antitrust Lawsuit Against Qualcomm

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The United States Federal Trade Commission (FTC) has decided not to pursue its antitrust lawsuit against Qualcomm any further. In a statement, FTC’s Acting Chairwoman Rebecca Kelly Slaughter said that the commission is facing significant headwinds in this matter. As such, the commission “will not petition the Supreme Court to review the decision of the Court of Appeals for the Ninth Circuit” in the case.

The FTC vs Qualcomm case dates all the way back to January 2017. The American antitrust law enforcement agency alleged that the chip giant used its dominant position as a supplier of smartphone processors to engage in “anticompetitive supply and licensing terms” that could weaken competitors.

The lawsuit specifically targeted Qualcomm’s licensing model. The company requires its customers to pay a royalty based on the device’s overall cost. The FTC alleged that Qualcomm maintains a “no license, no chips” policy that forces phone manufacturers to agree to its preferred license terms.

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Qualcomm was also alleged to have prevented Apple from sourcing chipsets from other vendors between 2011 and 2016. “Qualcomm recognized that any competitor that won Apple’s business would become stronger,” FTC said in a statement announcing the lawsuit. The commission was seeking a court order to undo and prevent the chip giants’ “unfair methods of competition.”

FTC did win the Qualcomm case but an Appeals Court reversed the decision

Soon after the FTC announced the lawsuit against Qualcomm, rival chipmakers including Intel and Samsung lent their support to the trade body. And after two years of court proceedings, the FTC eventually won the case in May 2019. Judge Lucy H. Koh of the United States District Court for the Northern District of California ruled the case in the agency’s favor. She agreed that the chipmaker stifled competition with its anticompetitive business practices.

However, Qualcomm appealed that decision and won a ruling in its favor a few months later, in August 2019. A three-judge panel of the United States Ninth Circuit Court of Appeals ruled that the FTC was unable to support its claims with concrete evidence. The commission could not explain how Qualcomm’s terms impacted its competitors negatively.

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The FTC requested an en banc hearing of the ruling in September 2019. However, the request was denied. There were speculations that the commission may take the case to the Supreme Court for review. However, it has now decided against doing so, ending a four-year-long court battle.

“The FTC’s staff did an exceptional job presenting the case,” said Slaughter. “I continue to believe that the district court’s conclusion that Qualcomm violated the antitrust laws was entirely correct and that the court of appeals erred in concluding otherwise.”

She added that the FTC and other law enforcement agencies now need to “boldly enforce the antitrust laws to guard against abusive behavior by dominant firms” more than ever. “The FTC will closely monitor conduct in this arena.”

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