Qualcomm Hit by Second Antitrust Fine in Europe -- Update
July 18 2019 - 7:36AM
Dow Jones News
By Laurence Norman
BRUSSELS -- European Union competition authorities are imposing
a EUR242 million ($272 million) fine on Qualcomm Inc., the second
penalty from the bloc in 18 months and its latest move targeting
top U.S. tech companies for breaching antitrust rules.
EU antitrust chief Margrethe Vestager said Thursday that
Qualcomm had abused its dominant position to drive a competitor out
of business, hindering competition in the market for so-called
baseband chips, which connect smartphones and tablets to cellular
networks. Qualcomm is the world's largest supplier of baseband
chips.
The fine comes amid several legal battles for Qualcomm,
including in U.S. courts. The Justice Department has warned that
tough penalties may harm the U.S. chip maker in its race against
Chinese competitors in the 5G business.
The EU started a formal probe of the case in 2015 after a
competitor to Qualcomm, British phone 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. Icera has since been bought by Nvidia
Corp., which later withdrew from the baseband chips market.
Qualcomm disputes the allegation.
However Ms. Vestager said Thursday that the EU had internal
documents from the company showing that Qualcomm had sold its
baseband chipsets "at a price below cost to key customers 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 added.
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 last year, the EU slapped a fine of $1.2 billion on
Qualcomm over payments made to Apple Inc. at the expense of another
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 EU's top court.
Since then, Qualcomm has faced growing legal troubles in the
U.S. In May, a federal judge ruled 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.
Thursday's Qualcomm announcement comes the day after EU
antitrust authorities opened a probe into Amazon over its treatment
of merchants that sell goods on its site.
Mrs. 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 for misleading regulators during a review of its
acquisition of the WhatsApp chat service and 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 contibuted to this
article.
Write to Laurence Norman at laurence.norman@wsj.com
(END) Dow Jones Newswires
July 18, 2019 07:21 ET (11:21 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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