Qualcomm investigated by EC over alleged market abuses

16 Jul 2015

The European Commission has begun a dual investigation into the business practices of Qualcomm, the maker of the chips that power most of the smartphones on the planet.

The European Commission is investigating possible abusive behavior by Qualcomm in the field of baseband chipsets used in consumer devices like smartphones.

Qualcomm is the world’s largest supplier of baseband chipsets that make smartphones capable of 3G and 4G communications. Most prominent smartphone devices would feature versions of its popular Snapdragon processor.

The first investigation will examine whether Qualcomm breached EU antitrust rules by offering financial incentives to companies to buy baseband chipsets.

The second investigation will look at whether Qualcomm engaged in “predatory pricing” by reducing prices to force competitors out of the market.

Article 102 of the Treaty on the Functioning of the European Union prohibits the abuse of a dominant market position that may affect trade between EU member states.

“We are launching these investigations because we want to be sure that high-tech suppliers can compete on the merits of their products,” EU Commissioner in charge of competition policy Margrethe Vestager said.

“Many customers use electronic devices such as a mobile phone or a tablet and we want to ensure that they ultimately get value for money. Effective competition is the best way to stimulate innovation.”

Qualcomm rejects market abuse claims

Qualcomm said that the allegations made to the European Commission are “factually inaccurate and legally meritless”.

It said: “The accusation that Qualcomm has not lived up to its commitments to standard-setting organisations to license its essential patents on fair and reasonable terms is belied by the more than 130 licenses that Qualcomm has granted to a broad range of companies, among them five of the six reported claimants.”

This is the latest of a series of tech-related probes being conducted by the European Commission, including into Google, Amazon and Apple.

Earlier this year Qualcomm agreed to pay a fine of US$975m to end a 14-month Chinese government investigation into anti-competitive practices.

If the European Commission finds Qualcomm guilty of market abuse it could fine the company up to 10pc of global earnings.

“Qualcomm disagrees with any suggestion that it has contributed less significant technology to the WCDMA 3G standard,” the company stated.

“Indeed, it is widely acknowledged that efforts to design around Qualcomm’s fundamental innovations in formulating the UMTS/WCDMA standard were unsuccessful.

“It is especially ironic that the complaints are being lodged by suppliers who voluntarily entered into license agreements with Qualcomm, acknowledging its leading WCDMA patent portfolio.

“This action appears to be nothing more than an attempt by these licensees to renegotiate their license agreements by seeking governmental intervention,” Qualcomm said.

Qualcomm Stadium image via Shutterstock

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years