Qualcomm fined €1bn for illegal Apple payments

Semiconductor leadership and Broadcom

EU Slaps Qualcomm With a $1.2 Billion Antitrust Fine

The European Union (EU) has fined USA smartphone chip supplier Qualcomm 997 million euros ($1.23 billion) for abusing its market dominance found illegal under EU antitrust rules, the European Commission said on Wednesday.

As one of, if not the, world's largest supplier of LTE baseband chipsets, Qualcomm can probably swallow the fines.

The EU competition commissioner Margrethe Vestager mentioned in the press statement that "This is illegal under EU antitrust rules and why we have taken today's decision".

The European Commission, the governing body of the European Union, fined USA tech conglomerate Qualcomm almost 1 billion euros for conspiring with Apple.

The key customer was Apple, which the commission said received billions to use Qualcomm chipsets exclusively in iPhones and iPads. In 2011, Qualcomm and Apple signed an agreement that would involve the former offering Apple "significant payments" so long as the smart phone maker didn't source these chipsets from any other company.

The EU commissioner argued that Qualcomm's behavior effectively blocked out competition and "denied customers and other companies more choice and innovation".

"The outcome is that rivals are prevented from challenging dominant companies with more innovative products", Vestager said.

Market dominance itself is not an act of abuse, but using that dominance to restrict competition and sabotage rival firms is a violation of the EU's antitrust rules.

"We have a strong case for judicial review and we will immediately commence that process", Rosenberg added.

Separate from the EU's investigation, Apple and Qualcomm are locked in a wide-ranging legal battle over the latter's business practices.

According to the Commission, a 2011 deal saw Qualcomm agree to "significant" payments for its chips to be used exclusively within the Apple devices. It remained until the end of 2016. "The EC decision does not relate to Qualcomm's licensing business and has no impact on ongoing operations", it said.

Part of the pact stipulated that Apple must return to Qualcomm a large amount of past payments if it made a decision to switch to a rival chipmaker.

The Commission's fine of €997,439,000 is equivalent to 4.9 per cent of Qualcomm's turnover throughout 2017 and covers a period of five years, six months and 23 days.

Apple sued Qualcomm for approximately $1 billion in January 2017, accusing the semiconductor company of abusing its monopoly in the mobile device market to gain unfair royalties from Apple's inventions.

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