European Commission opens two antitrust investigations into Qualcomm

The market for 3G and 4G chipsets powering smartphones, tablets and other devices comes under scrutiny.

The European Commission has opened two formal antitrust investigations into what it has termed "possible abusive behaviour by Qualcomm" in the field of baseband chipsets used in smartphones and tablets.

The first investigation will examine whether Qualcomm has breached EU antitrust rules that prohibit the abuse of a dominant market position by offering financial incentives to customers if they buy baseband chipsets exclusively or almost exclusively from Qualcomm. The second will look into whether Qualcomm engaged in 'predatory pricing' by charging prices below costs with a view to forcing its competition out of the market.

The EU Commissioner in charge of competition policy, Margrethe Vestager, said: "We are launching these investigations because we want to be sure that high-tech suppliers can compete on the merits of their products. Many customers use electronic devices such as a mobile phone or a tablet, and we want to ensure that they ultimately get value for money. Effective competition is the best way to stimulate innovation."

The EU said that because European consumers increasingly access the internet through mobile devices, it's important to have effective competition for the supply of key components such as the baseband chipsets used for voice and data transmission: Qualcomm is the world's largest supplier of these components.

According to the EU, the first antitrust investigation focuses on Qualcomm's conditions related to the supply 3G (UMTS) and 4G (LTE) chipsets. In particular, the Commission will investigate whether Qualcomm has granted payments, rebates or other financial incentives to its customers on condition that they purchase all or a significant part of their baseband chipsets requirements from Qualcomm, and whether any such behaviour might hinder the ability of rivals to compete.

The second investigation focuses on Qualcomm's pricing practices with regard to certain 3G chipsets, and in particular whether Qualcomm has engaged in 'predatory pricing' by selling these chipsets at prices below costs, with the intention of hindering competition.

The opening of proceedings means that the Commission will examine the cases as a matter of priority, but the EC noted that it does not prejudge the outcome of the investigations.

Commenting on the EC's move, Qualcomm said: "This step allows investigators to gather additional facts, but it represents neither an expression by the Commission on the merits of the case nor an accusation against the company. While we were disappointed to hear this, we have been cooperating and will continue to cooperate with the Commission, and we continue to believe that any concerns are without merit."