EU to Fine Qualcomm Over Exclusivity Payments to Apple -- Update
January 24 2018 - 5:14AM
Dow Jones News
By Natalia Drozdiak in Brussels and Ted Greenwald in San Francisco
Qualcomm Inc. is set to be slapped with a European Union
antitrust fine Wednesday over payments it made to Apple Inc. for
exclusively using its chips in smartphones and other products,
people familiar with the matter said.
EU antitrust fines can reach as high as 10% of a company's
annual revenue, though are usually much lower. Qualcomm brought in
$22.3 billion in revenue for fiscal 2017.
Qualcomm can appeal the EU's decision to the bloc's highest
courts, though the company would still have to pay the fine and
change any conduct while the court case plays out, a process that
can take years.
The EU had opened a probe into Qualcomm's conduct in 2015 over
concerns it had paid "significant amounts" to a major smartphone
and tablet manufacturer since 2011 on the condition that it use
exclusively Qualcomm's baseband chips.
That contract harmed competition and innovation in the chipset
market, the EU said at the time.
The EU's move Wednesday fits into its broader strategy to boost
and improve digital markets across the bloc's 28 member states. As
part of that project, the European Commission, the bloc's
executive, has pursued strict privacy rules, antitrust
investigations and other rules in a bid to rein in the behavior of
large U.S. tech companies.
The fine follows a decision last week by the EU regulator to
clear Qualcomm's acquisition of NXP Semiconductors NV with
conditions.
The Financial Times was first to report that the fine would come
Wednesday.
A separate EU antitrust investigation is ongoing over whether
Qualcomm sold chips below cost to force a competitor, Icera Inc.,
out of the market.
The EU action is the latest in a string of bad news for
Qualcomm.
The leading vendor of communications chips for smartphones in
recent years has taken fire from regulators in several countries,
all alleging that it wields its market dominance to overcharge
customers and thwart competitors.
Qualcomm, based in San Diego, earns most of its profits from
charging handset makers royalties for using its cellular patents.
Most of the government investigations so far have focused on its
licensing practices.
The Taiwanese government last year fined Qualcomm $773 million
over its patent practices, after South Korea had imposed an $853
million fine the previous year. China fined Qualcomm $975 million
in 2015. A suit by the U.S. Federal Trade Commission is pending.
Qualcomm is also engaged in a legal battle with Apple following
similar complaints from the iPhone maker, and the EU's decision
Wednesday is likely to encourage Apple in that fight.
Qualcomm has contested these actions, saying they are based on
misconceptions and flawed legal reasoning, and that its business
practices are fair and legal.
The combined attacks depressed Qualcomm's stock price, paving
the way for Broadcom Ltd.'s $105 billion hostile takeover bid last
November. Qualcomm has so far rejected Broadcom's overture in what
would be the biggest-ever tech deal.
Write to Natalia Drozdiak at natalia.drozdiak@wsj.com and Ted
Greenwald at Ted.Greenwald@wsj.com
(END) Dow Jones Newswires
January 24, 2018 04:59 ET (09:59 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
QUALCOMM (NASDAQ:QCOM)
Historical Stock Chart
From Mar 2024 to Apr 2024
QUALCOMM (NASDAQ:QCOM)
Historical Stock Chart
From Apr 2023 to Apr 2024