Qualcomm Fined £217m By EU For ‘Predatory Pricing’

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Chip giant used ‘predatory pricing’ to drive a British competitor out of the market for 3G phone hardware

Qualcomm has reacted angrily after the European Commission slapped it with a stiff fine for ‘predatory pricing’ against a British competitor.

The European Commission fined Qualcomm €242 million for abusing its market dominance in 3G baseband chipsets,” it said in a statement. “Qualcomm sold below cost, with the aim of forcing its competitor Icera out of the market.”

This fine has been looming for a number of years now, after the European investigation of Qualcomm began back in 2015.

Predatory Pricing

Qualcomm had been hit with two EU charges in 2015 amid accusations that it tried to price rivals out of the 3G industry between mid 2009 and mid 2011.

Regulators said at the time that Qualcomm had abused its position as a leader in the production of semiconductors for the lucrative consumer market.

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

But its troubled began when UK-based Icera, a developer of baseband processors for 3G and 4G cellular phones and tablets filed a complaint with the European Commission way back in 2010. At that time, it accused Qualcomm of anti-competitive behaviour.

Icera was subsequently acquired by graphic chip specialist Nvidia in May 2011, and it later sued Qualcomm, alleging the company’s practices drove Icera out of the marketplace.

And now the European Commission has ruled that Qualcomm engaged in ‘predatory pricing’.

“Baseband chipsets are key components so mobile devices can connect to the Internet,” said Commissioner Margrethe Vestager. “Qualcomm sold these products at a price below cost to key customers with the intention of eliminating a competitor.”

“Qualcomm’s strategic behaviour prevented competition and innovation in this market, and limited the choice available to consumers in a sector with a huge demand and potential for innovative technologies,” she added. “Since this is illegal under EU antitrust rules, we have today fined Qualcomm €242 million.”

Qualcomm reaction

But Qualcomm had reacted angrily to the fine and promised to appeal, describing the decision as ‘meritless.’

“The Commission spent years investigating sales to two customers, each of whom said that they favoured Qualcomm chips not because of price but because rival chipsets were technologically inferior,” general counsel Don Rosenberg was quoted by CNN as saying in a statement. “This decision is unsupported by the law, economic principles or market facts.”

It should be noted that this is not the first time that Qualcomm has been stung with regulatory fines.

In January 2018, the European Union levied a €997 million (£891m) fine against Qualcomm, alleging it paid key customers to sign exclusivity agreements.

That fine was for paying Apple to use only its chips in a bid to squeeze out rival Intel and others.

China’s anti-monopoly bureau meanwhile has also fined Qualcomm $975 million in 2015 for violating its antitrust laws.

And in May this year US District Judge Lucy Koh in San Jose, California, ruled 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.

Her ruling came after the US Federal Trade Commission (FTC) accused Qualcomm in 2017 of violating antitrust law.

Qualcomm has disputed that US judge ruling, and asked her not to enforce the antitrust order until it can file an appeal.

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Author: Tom Jowitt
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