EU fines Qualcomm $272 million for antitrust violation

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On Wednesday, the European Commission fined chipmaker Qualcomm €242 million ($272.8 million). The European Union’s (EU) regulatory body issued the penalty after finding that the corporation engaged in “predatory pricing” practices.

This week’s penalty announcement marks the second time in two years that the Commission has sanctioned the world’s largest component maker for antitrust practices. Last year, the regulator fined the company €990 million ($1.2 billion) for paying Apple to purchase its 4G modems exclusively.

Why the EU fined Qualcomm a Second Time

The European Commission formally launched an investigation into Qualcomm’s pricing practices back in 2015. Over the course of its inquiry, the regulator determined the San Diego company sold 3G chipsets to Huawei and ZTE at less than cost to undercut rival chipmaker, Icera. The Commission states the corporation utilized illegal pricing tactics to hurt its competitor from 2009 to 2011.

Nvidia acquired Icera for $367 million in 2011. At the time, the Santa Clara, California company intended to integrate Icera’s modems into its Tegra processors, but the project never came to fruition. In 2015, Nvidia decided it couldn’t compete with Qualcomm and exited the mobility business altogether.

EU Competition Commissioner Margrethe Vestager noted, “Qualcomm’s strategic behavior 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.”

Qualcomm has announced it will appeal the Commission’s fine, which represents 1.27 percent of its 2018 revenue. Don Rosenberg, the firm’s general counsel, said the company’s offending 3G modem pricing took place “over a very short time period and for a very small volume of chips.” Rosenberg also argued that Qualcomm’s actions didn’t harm Icera.

Other Recent Qualcomm Fines

The European Commission’s fine is the second regulatory sanction the chipmaker has endured this year. In May, the Federal Trade Commission (FTC) prevailed in its two-year lawsuit against the corporation. It alleged Qualcomm used its market position to demand exorbitant fees from its clients.

On May 21, U.S. District Judge Lucy Koh validated the FTC’s case by finding the company guilty of violating American antitrust law.

As part of her ruling, Koh ordered Qualcomm to renegotiate more favorable licensing terms with its customers. She also directed the company to stop charging device manufacturers royalty payments. Furthermore, the judge required the firm to submit to seven years of government monitoring.

Since 2015, regulators in China, South Korea, and Taiwan have fined Qualcomm a total of $2.602 billion for various antitrust infractions.