EU Says Qualcomm Tactics May Have Unfairly Crushed Rivals

  • Two complaints target predatory pricing, exclusivity payments
  • EU's Vestager says Qualcomm may have pushed out competitors

Qualcomm Inc. was sent antitrust objections by the European Union over sales tactics that regulators say thwarted rivals for mobile-phone chip technology.

Qualcomm "has paid significant amounts" since 2011 to an unidentified major smartphone and tablet manufacturer in return for it exclusively using Qualcomm chipsets in products, the European Commission said in an e-mailed statement. The company may also have sold some chipsets below cost from 2009 to 2011 to crush smaller competitor Icera, now owned by Nvidia Inc.

"I am concerned that Qualcomm’s actions may have pushed out competitors or prevented them from competing," EU Competition Commissioner Margrethe Vestager said. "Many consumers enjoy high-speed Internet on smartphones and other devices –- baseband chipsets are key components that make this happen."

Qualcomm would add to a growing list of U.S. technology companies to face EU antitrust action, following probes into Alphabet Inc.’s Google, Microsoft Corp. and Intel Corp. A statement of objections may lead to fines, capped at 10 percent of yearly global revenue, which can be avoided if a company agrees to make changes to business behavior.

Taiwan Probe

Qualcomm said in a statement that its sale practices have always complied with EU competition law.

“We look forward to demonstrating that competition in the sale of wireless chips has been and remains strong and dynamic.,” Don Rosenberg, the company’s General Counsel, said in an e-mailed statement.

The San Diego-based company also said that its patent licensing arrangements are being probed by the Taiwan Fair Trade Commission. Qualcomm "believes it complies" with Taiwanese law and will cooperate.

Taiwan’s Fair Trade Commission probe into Qualcomm, which started in February, is still under way, Chiu Yung-Ho, the authority’s vice chairman, said in a telephone interview. He declined to comment further.

The EU sent two statements of objections focusing on different issues. Qualcomm’s exclusivity payments to the phone and tablet manufacturer made the company less likely to buy rival products, harming competition and innovation” for third- and fourth-generation mobile technology baseband chipsets, the EU said.

Qualcomm’s below-cost pricing of chips sold to two customers aimed at forcing Icera out of the market for chips at a time when it posed a threat, the EU said. Icera, whose chips were used in mobile Internet modems known as dongles, was bought by graphics chipmaker Nvidia for $367 million in 2011. Nvidia filed a lawsuit against Qualcomm in the U.K. courts in September that didn’t give details of its claims

Qualcomm has three months to respond to the exclusivity allegations and four months for the pricing case. It can seek an oral hearing with officials.

The company was fined $975 million in February to settle a Chinese antitrust investigation. It also agreed to offer local companies a discount on technology licensing. The company has also disclosed that it’s facing possible investigations in the U.S. and Korea.

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