July 23 (Bloomberg) -- Qualcomm Inc., the world’s biggest maker of mobile-phone chips, was fined a record 260 billion won ($208 million) by South Korea’s antitrust regulator for deterring competition through discriminatory charges.

The Korea Fair Trade Commission ordered the San Diego-based company to stop charging higher royalties to customers who buy chips from rivals and to cease offering rebates to handset makers who purchase products mainly from Qualcomm. The company should also halt receiving royalties on patents that are obsolete or have expired, the regulator said today.

Qualcomm pledged to appeal. The ruling threatens to undermine the company’s revenue in its largest market, home to two of the world’s three largest mobile-phone makers including Samsung Electronics Co. and LG Electronics Inc. The U.S. chipmaker is also under investigation by the European Union’s antitrust regulator for what it charges to license its patented technology.

Qualcomm General Counsel Donald Rosenberg said the company doesn’t anticipate any decrease in sales. “We will make sure we remain price-competitive,” he said.

South Korea accounted for 35 percent of Qualcomm’s revenue in its last fiscal year, according to data compiled by Bloomberg.

‘Highly Competitive’

“We are highly competitive,” Rosenberg said. “Our customers buy from us because of the high quality of our products and the service we provide.”

Qualcomm fell $1.05, or 2.2 percent, to $47.40 in Nasdaq Stock Market trading at 4 p.m., after its sales forecast for the quarter ending in September missed some analysts’ estimates.

The commission may take months before it issues a formal ruling, and Qualcomm can’t appeal to a South Korean court until then, Rosenberg said. He said rivals Texas Instruments Inc. and Ericsson AB gave the commission “raw allegations with no support.”

Minako Nakatsuma Olofzo, a spokeswoman at Stockholm-based Ericsson, said the company had no comment. Gail Chandler, a spokeswoman for Dallas-based Texas Instruments, had no immediate comment.

Record Fine

The penalty is the largest imposed by the commission, more than double the previous record 104.5 billion won fine received by 10 petrochemical companies in 2007, according to the regulator. The fine is equivalent to about 28 percent of Qualcomm’s profit in its latest quarter.

Qualcomm owns the code-division multiple access wireless technology that South Korea and Japan have primarily adopted since the 1990s, charging companies such as Samsung Electronics and Sharp Corp. royalty fees to make CDMA-based mobile phones.

The company used its CDMA patents to prevent Korean handset makers from buying other products made by Qualcomm’s rivals, the regulator said. For instance, the company would charge royalty fees of 5 percent to those using Qualcomm’s modem chips, while demanding fees of 5.75 percent from those that don’t, according to the statement.

The company would also offer rebates of 3 percent to customers that buy at least 85 percent of their modem chips from Qualcomm, the regulator said.

European Competition Commissioner Neelie Kroes said this month she will soon decide whether to file a formal complaint against Qualcomm in a dispute over patent royalties.

The Brussels-based commission began probing how much Qualcomm charges for licensing its patented technology after a 2005 complaint by Nokia Oyj, Broadcom Corp., Texas Instruments, Ericsson and two other competitors.

Nokia and Broadcom withdrew their complaints after reaching settlements in which Qualcomm paid Broadcom $891 million and Nokia paid Qualcomm $2.3 billion as part of a broader licensing agreement.

To contact the reporter on this story: Kevin Cho in Seoul at kcho2@bloomberg.net.

Last Updated: July 23, 2009 16:25 EDT