EU fines Qualcomm nearly €1 billion for abuse of dominant position
The European Commission has fined Qualcomm EUR 997 million for abusing its dominant position in lte chipsets. According to the Commission, the American chip designer has paid billions to Apple to exclude competitors.
According to European Commissioner for Competition, Margrethe Vestager, Qualcomm has locked out competitors in the LTE chipset market for five years. Qualcomm did so, according to the Commission, by paying Apple billions of dollars so that Apple would not purchase chips for modems for iPhones and iPads from Qualcomm’s competitors. This has harmed competition, giving consumers less choice and slowing down innovation, according to the European Commission.
Vestager reports that the 2011 agreement between Apple and Qualcomm states that Qualcomm would stop paying Apple if the Cupertino company released iPhones or iPads with a chipset from a competitor of Qualcomm. Apple would also have had to repay a large part of these payments to Qualcomm if it had chosen another customer.
The European Commissioner mentions the fact that internal documents show that Apple has in the past seriously considered choosing Intel instead of Qualcomm as a supplier for part of the necessary chips. However, this did not happen, mainly due to the deal between Qualcomm and Apple. This agreement between Qualcomm and Apple ended at the end of 2016. According to Vestager, Apple is not to blame in this case; there would be no evidence that Apple violated European competition rules.
The fine of 997 million euros is a response to, among other things, the seriousness of the violations of European competition rules and the duration of the violations, which, according to the Commission, lasted 5.5 years. The fine amounts to 4.9 percent of Qualcomm’s turnover in 2017. The Commission has ordered Qualcomm not to engage in similar anti-competitive activities.
Qualcomm largely had 90 percent market power in the LTE chipset market between 2011 and 2016. Having market power in itself is not against the rules, but it is if a company abuses it by hindering competitors. In addition, the Commission notes that this market has high barriers to entry due to the complex technology, which makes it difficult for potential competitors to enter the market.
The American chip designer has already been fined by national regulators. Qualcomm was fined €650 million by the Taiwanese regulator for abusing its patents in the field of mobile networks. The company was also fined in South Korea and China for obstructing competition and violating patent regulations.
Last week, the European Commission approved the acquisition of NXP by Qualcomm. There are conditions attached to this, such as the promise that Qualcomm will continue to license the Mifare technology of NXP’s nfc chips for eight years under the current conditions. In addition, Qualcomm must ensure that the NFC chips continue to work with processors from other brands for eight years, as is now the case. Moreover, the Commission does not allow Qualcomm to take over the patents that are essential for the NFC standard from NXP.