US Judge Rules Qualcomm Violated Antitrust Law

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US judge rules Qualcomm’s policies strangled competition for years, but an appeal against the ruling is planned

Qualcomm has been handed a legal setback after a US judge issued a damming verdict against the firm.

The US ruling says that Qualcomm illegally suppressed competition in the market for smartphone chips by threatening to cut off supplies and extracting excessive licensing fees from mobile manufacturers, Reuters reported.

This excessive licensing fee was also at the centre of a lengthy legal tussle between Qualcomm and Apple. Last month Apple surprised many when it opted to end the bitter legal battle, and also agreed to make an undisclosed payment to Qualcomm, and use its chips going forward.

US Ruling

But the Apple case aside, Qualcomm has been facing regulatory investigations around the world for a number of years now.

Regulators in South Korea, Taiwan, the EU and China have for example imposed fines on Qualcomm for its business practices.

US regulators have also made similar allegations, with the US Federal Trade Commission (FTC) accusing Qualcomm in 2017 of violating antitrust law.

The San Diego-based company produces the chipsets for many of the world’s leading smartphones and tablets.

And now the FTC has scored a victory after a 10-day non-jury trial in January.

Qualcomm illegally suppressed competition in the market for smartphone chips by threatening to cut off supplies and extracting excessive licensing fees, Reuters cited a US judge as saying.

The ruling on Tuesday night US District Judge Lucy Koh in San Jose, California, reportedly caused Qualcomm shares to plunge 11.4 percent on Wednesday.

“Qualcomm’s licensing practices have strangled competition” in parts of the chip market for years, harming rivals, smartphone makers, and consumers, Koh wrote in a 233-page decision.

Judge Koh then ordered Qualcomm to renegotiate licensing agreements at reasonable prices, without threatening to cut off supplies, and ordered that it be monitored for seven years to ensure its compliance.

Qualcomm appeal

But Qualcomm is not taking the Judge’s ruling lying down, and immediately asked for ruling to be placed on hold and sought an appeal to the federal appeals court in California.

“We strongly disagree with the judge’s conclusions, her interpretation of the facts and her application of the law,” Qualcomm’s general counsel Don Rosenberg was quoted as saying in a statement.

Koh had areportedly said that Qualcomm engaged in “extensive” anticompetitive conduct targeting more than a dozen original equipment manufacturers such as Apple, BlackBerry, Huawei, Lenovo, LG, Motorola, Samsung, and Sony, often by cutting off or threatening to cut off chip supplies or withholding technical support.

She also said Qualcomm’s monopoly power in modem chips enabled the company to sustain “unreasonably high” royalty rates not justified by its contributions to the marketplace.

“With practices that result in exclusivity and eliminate opportunities to compete for OEM business, Qualcomm undermines rivals in every facet,” she wrote.

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Author: Tom Jowitt
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