European Commission fines Qualcomm nearly €1bn
The European Commission has fined Qualcomm €997 million ($1.4 billion) for illegal behaviour under EU competition law, in a decision that relates to IP.
Commissioner Margrethe Vestager announced the fine, which represents 4.9% of Qualcomm’s turnover in 2017, in a press conference today, January 24.
“Qualcomm illegally shut out rivals from the market for long-term evolution (LTE) baseband chipsets for over five years, thereby cementing its market dominance,” said Vestager.
The Commission said that between 2011 and 2016, Qualcomm paid billions of US dollars to Apple in return for Apple not buying these chips from Qualcomm’s rivals.
“This meant that no rival could effectively challenge Qualcomm in this market, no matter how good their products were,” said a press release from the Commission.
Vestager added that Qualcomm’s behaviour denied consumers and other companies more choice and innovation.
Qualcomm signed an agreement with Apple in 2011, agreeing to make payments to Apple on the condition that Apple would exclusively use Qualcomm chipsets in its iPhone and iPad devices.
In 2013, the agreement was extended to the end of 2016.
The agreement also stated that if Apple launched a device with a chipset supplied by a rival, Qualcomm would cease the payments and Apple would have to return a large part of the payments it had received in the past.
Pat Treacy, partner at Bristows, said the Commission identified Qualcomm’s IP rights as “contributing to the high barriers to entry in the market”, which included the significant research and development expenditure necessary to enter.
The Commission’s decision comes amid Qualcomm’s worldwide litigation against Apple.
Treacy explained that it’s difficult to know how much of a substantive impact the decision will have on the litigation between the companies.
“However, a finding of this nature certainly has the potential to change the dynamics of litigation, lending credibility to related assertions,” she noted.
Apple sued Qualcomm for approximately $1 billion in January 2017, accusing the semiconductor company of abusing its monopoly in the mobile device market to gain unfair royalties from Apple’s inventions.
Apple has also sued the semiconductor company in China, Japan, Taiwan, and the UK.
In response, Qualcomm filed a counterclaim and is also seeking to ban the importation of Apple’s iPhones into the US.
Qualcomm is also facing an antitrust lawsuit brought against it by the Federal Trade Commission in the US.
The FTC alleged that Qualcomm has used its dominant position to “impose onerous and anti-competitive supply and licensing terms on cell phone manufacturers and to weaken competitors”.
Last week, WIPR reported that Qualcomm had agreed not to obtain all of NXP Semiconductors’ patents in its planned acquisition of the company, in a bid to secure approval from the Commission.
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