EU watchdog fines Qualcomm €242m over pricing

Qualcomm was fined €242m by EU competition regulators for deliberately pricing some chips so low they could eliminate a smaller rival.

EU watchdog fines Qualcomm €242m over pricing

Qualcomm was fined €242m by EU competition regulators for deliberately pricing some chips so low they could eliminate a smaller rival.

The penalty comes a year after Qualcomm was ordered to pay €997m for thwarting rival suppliers to Apple. The EU said the latest fine was 1.27% of Qualcomm’s revenue last year and “aimed at deterring market players” from trying the same thing.

US-owned Qualcomm, which has a large facility in Cork, is the largest maker of chips for mobile phones and is unique among semiconductor makers in that it gets most of its profit from licensing patents. Makers of handsets pay the company royalties, whether or not they use its chips.

The Qualcomm investigation targeted 3G chips for internet mobile dongles sold between 2009 and 2011. Regulators said these were sold below cost to Huawei and ZTE, “two strategically important customers”, in order to push Icera, now owned by Nvidia, out of the market.

“Icera was becoming a viable supplier of UMTS chipsets providing high data rate performance, thus posing a growing threat to Qualcomm’s chipset business,” the EU said.

Companies have complained about the slow pace of EU antitrust enforcement in fast-moving technology markets. Icera sought to draw in the EU by filing a complaint in 2010. It was sold to Nvidia a year later in 2011. The EU opened a probe four years later. Qualcomm said it will appeal and “expose the meritless nature of this decision”. It said it plans to provide a financial guarantee instead of paying the fine, until the courts have ruled.

“The commission’s decision is based on a novel theory of alleged below-cost pricing over a very short time period and for a very small volume of chips,” Qualcomm’s general counsel Don Rosenberg said.

Contrary to the commission’s findings, Qualcomm’s alleged conduct did not cause anti-competitive harm.

Last year Qualcomm was handed the EU’s fifth-largest penalty over payments to Apple that the EU said were an illegal ploy to ensure only its chips were used in iPhones and iPads. Qualcomm is challenging the fine at the EU courts.

- Bloomberg

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