ECC goes for Qualcomm's neck once again, slaps a €242 million fine for trying to eliminate 3G baseband chipset competitors
The European Competition Commission (ECC) has fined Qualcomm, the world's largest smartphone chip maker, €242 million (US$272 million) for anti-competitive practices. The fine amounts to about 1.27% of Qualcomm's turnover in 2018.
According to the ECC, Qualcomm sold 3G UMTS baseband chipsets at a price below cost to customers between mid-2009 and mid-2011 with the aim of eliminating the competition. The decision was announced by EU Competition Commissioner Margrethe Vestager who said,
Baseband chipsets are key components so mobile devices can connect to the Internet. 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. Since this is illegal under EU antitrust rules, we have today fined Qualcomm €242 million."
The ECC noted that Qualcomm sold these baseband chipsets to important customers such as Huawei and ZTE with the aim to eliminate Icera, its main competitor in this segment. Icera was acquired in May 2011 by NVIDIA, which ultimately wound down the business in 2015. Significantly high market share of Qualcomm in this business (~60%) and various barriers related to Qualcomm's IP that had to be overcome in order to gain a foothold in this segment prompted the EC to start investigations in 2015.
The ECC's investigation found that Qualcomm engaged in "predatory pricing" and based its conclusion on a price-cost test for the chipsets and a "broad range of qualitative evidence demonstrating anti-competitive rationale". The fine of €242,042,000 was calculated based on direct and indirect sales of Qualcomm's UMTS chipsets in the European Economic Area.
Qualcomm is not taking the decision lightly and said it would appeal the decision as it was "unsupported by the law, economic principles, or market facts", according to a New York Times report.
This is not the first time Qualcomm is sailing in troubled waters, though. Last year, the European Competition Commission fined the US smartphone chip maker a hefty €997 million (US$1.2 billion) after it found evidence of monopolistic practices by way of making payments to Apple so that it would not buy chips from rivals. Recently, a Californian court observed that Qualcomm violated antitrust laws by strangling competition in the CDMA and premium LTE chip segment.
Earlier this year, Ms. Vestager fined Google €1.49 billion after the EC found the company indulging in anti-competitive practices related to Google AdSense. Her term as Competition Commissioner ends on October 31 this year.