EU charges Qualcomm with abuse of market power

09 Dec 2015


The European Commission (EC) has accused the world's biggest chipset maker Qualcomm Inc for abusing its market dominance to stifle competition, marking the regulator's latest crackdown on global corporates.

The action follows shortly after the launch of a new patent-related investigation by Taiwanese competition authorities on the US chipmaker.

The EC, the European Union's top antitrust body, has issued two statements of objections to Qualcomm on exclusivity payments and predatory pricing.

The commission alleged that the chipmaker has made illegal payments to a smartphone and tablet maker for exclusively using its chipsets and selling the chipsets at lower prices to push a competitor out of the market.

''I am concerned that Qualcomm's actions may have pushed out competitors or prevented them from competing,'' EU commissioner in charge of competition Margrethe Vestager said.

''We need to make sure that European consumers continue to benefit from competition and innovation in an area which is at the heart of today's economy," the commissioner added.

Confirming the receipt of the EC's statements of objections, the US chipset maker said it has been cooperating with the ongoing probes.

"We look forward to demonstrating that competition in the sale of wireless chips has been and remains strong and dynamic, and that Qualcomm's sales practices have always complied with European competition law," the company's general counsel and executive vice president Don Rosenberg said in a statement.

San Diego, California-based Qualcomm is a world leader in 3G, 4G and next-generation wireless products and technologies, and also owns a vast patent portfolio.

Baseband chipsets are an integral part of mobile internet devices such as smartphones and tablets that are becoming increasing popular in the market and the regulator feels that effective competition in the field is vital for the consumers.

Under EU rules, dominant firms have the responsibility not to abuse their positions by restricting competition.

In the first statement, the commission alleged that since 2011, Qualcomm has paid significant amounts to a mobile devices manufacturer to use its products exclusively, thus harming competition and innovation in the markets.

In a second statement, the regulator accused Qualcomm that between 2009 and 2011, the firm engaged in predatory pricing of chipsets at prices below costs to hinder competition. Qualcomm's actions have been aimed at forcing baseband chipset maker Icera, the British subsidiary of US technology company Nvidia Corp, out of the market, the EC said.

Qualcomm has three and four months respectively to respond to EC's two statements of objections.

Under the EU antitrust rules, Qualcomm can face a fine of up to 10 per cent of its annual global revenue or about $2.5 billion, and also be forced to change its business practices if the allegations are proved.

The current investigations were opened in July. The EC had earlier conducted a probe on Qualcomm's patent-related practices, which was closed in 2009 without any legal penalties.
Separately, the Taiwan Fair Trade Commission (TFTC) has also initiated an investigation into whether the company's patent licensing arrangements violate the country's competition laws.

Earlier this year, the EC has filed formal charges against US giants Google Inc, Inc, Apple Inc, Starbucks Corp, and Russian gas behemoth Gazprom and more recently, fast food chain McDonald's Corp.

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