Remember that boring Apple vs. Qualcomm legal feud over chip royalties that escalated into a complex patent case last year? Well, things aren’t looking good for Qualcomm. Again.
The European Union has just announced sanctions against Qualcomm over the exclusive iPhone chip deal with Apple. The fine had a maximum $2 billion cap, but the EU was nicer than that, hitting Qualcomm with a $1.23 billion fine (€997 million).
This wouldn’t be Qualcomm’s first antitrust-related fine. Just in mid-October, the Taiwanese Fair Trade Commission slapped Qualcomm with a $773 million fine.
Before that, South Korean authorities fined Qualcomm $207 million (2014) and $854 million (2016). China’s antitrust regulator hit Qualcomm with a $975 fine in 2015.
A report from The Financial Times said the other day that the EU will issue its ruling on Wednesday, more than 30 months after the investigation into Qualcomm’s deal with Apple started. Qualcomm faced a fine of up to 10% of its annual business, or about $2 billion.
Lo and behold, that announcement came right on schedule. Here’s what Commissioner Margrethe Vestager had to say:
Qualcomm illegally shut out rivals from the market for LTE baseband chipsets for over five years, thereby cementing its market dominance. Qualcomm paid billions of US Dollars to a key customer, Apple, so that it would not buy from rivals. These payments were not just reductions in price – they were made on the condition that Apple would exclusively use Qualcomm’s baseband chipsets in all its iPhones and iPads.
This meant that no rival could effectively challenge Qualcomm in this market, no matter how good their products were. Qualcomm’s behavior denied consumers and other companies more choice and innovation – and this in a sector with a huge demand and potential for innovative technologies. This is illegal under EU antitrust rules and why we have taken today’s decision.
Qualcomm, unsurprisingly, said it will appeal the ruling. Here are comments from Don Rosenberg, executive vice president and general counsel of Qualcomm:
We are confident this agreement did not violate EU competition rules or adversely affect market competition or European consumers. We have a strong case for judicial review and we will immediately commence that process.
The EU fined Google a record $2.7 billion a few months ago, for abusing its dominant position in the online search business.
Apple meanwhile is seeking $1 billion from Qualcomm, rebates that the chipmaker reportedly withheld after supposedly discovering Apple’s role in a Korean antitrust investigation. In addition to that, each company filed additional patent suits last year.
Finally, Qualcomm also faces a similar investigation in the US, where the FTC is looking into Qualcomm’s allegedly abusive business deals.
