Qualcomm Incurs Another EU Fine -- WSJ
July 19 2019 - 3:02AM
Dow Jones News
By Laurence Norman
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (July 19, 2019).
BRUSSELS -- The European Union imposed a EUR242 million ($272
million) fine on Qualcomm Inc., the second penalty levied on the
chip maker by the bloc in 18 months and its latest antitrust action
against a top U.S. tech company.
EU antitrust chief Margrethe Vestager said Thursday that
Qualcomm had abused its dominant position to drive a rival out of
business, hindering competition in the market for so-called
baseband chips. Qualcomm is the world's largest supplier of
baseband chips. which connect smartphones and tablets to cellular
networks.
Qualcomm faces several legal challenges, including in U.S.
courts. At the same time, the U.S. Justice Department has warned
that tough penalties may hamper the chip maker in its race against
Chinese competitors to supply the rollout of 5G networks.
The EU started a formal probe of Qualcomm in 2015 after British
chip maker Icera alleged that between 2009 and 2011 the U.S.
company engaged in "predatory pricing," selling certain chips at a
price below the market to drive Icera out of business. Qualcomm has
disputed the allegation.
Icera was subsequently bought by Nvidia Corp., which later
withdrew from the baseband-chip market.
Ms. Vestager said Thursday that the EU had internal documents
from the company showing that Qualcomm had sold its baseband
chipsets to key customers at below cost with the intention of
eliminating a competitor.
"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," she said.
In a statement Thursday, Qualcomm said it would appeal the
decision to the EU's courts and would provide a financial guarantee
instead of paying the fine while its appeal is pending.
"The commission spent years investigating sales to two
customers, each of whom said that they favored Qualcomm chips not
because of price but because rival chipsets were technologically
inferior," said Don Rosenberg, executive vice president and general
counsel of Qualcomm. "This decision is unsupported by the law,
economic principles or market facts, and we look forward to a
reversal on appeal."
In January 2018, the EU slapped a fine of $1.2 billion on
Qualcomm over payments made to a customer, Apple Inc., at the
expense of chip-making rival Intel Corp. The EU's first-level
appeals court, the General Court, upheld the ruling in April, and
Qualcomm now is appealing to the bloc's top court.
In the U.S., a federal judge ruled in May that Qualcomm
unlawfully stifled competition in the market for wireless chips.
The decision, which sided with the Federal Trade Commission in its
antitrust suit against Qualcomm, delivered a major blow to a
company that has been held up by the Trump administration as a
keystone in U.S. technological competition with China.
The latest EU fine for Qualcomm comes a day after the bloc's
antitrust authorities opened a probe into Amazon.com Inc. over its
treatment of merchants that sell goods on its site.
Ms. Vestager has emerged as a major technology regulator. The EU
has issued $9.25 billion in fines against Alphabet Inc.'s Google,
ruling it abused the dominance of its search engine and Android
operating system for mobile phones to favor its own businesses.
The Danish commissioner, who is set to become a vice president
of the EU's executive for the next five years, also issued a fine
to Facebook Inc. for misleading regulators during a review of its
acquisition of the WhatsApp chat service. Ms. Vestager also ordered
Amazon, Apple and other global tech players to pay back billions of
dollars in taxes under what she alleged to be sweetheart deals with
tax authorities. Google is appealing the decisions against it, and
Amazon and Apple are appealing the tax cases.
Sam Schechner in Paris and Valentina Pop contributed to this
article.
Write to Laurence Norman at laurence.norman@wsj.com
(END) Dow Jones Newswires
July 19, 2019 02:47 ET (06:47 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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