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US chipmaker Qualcomm fined €242 million by Europe

Qualcomm sold products below cost to Huawei and ZTE, with the aim of forcing its competitor Icera out of the market, the EC has ruled.
Written by Steve Ranger, Global News Director

The European Commission (EC) has fined Qualcomm €242 million for abusing its market dominance in 3G baseband chipsets - 1.27% of the US chipmaker's turnover last year.

The EC said that the chip maker sold products to Huawei and ZTE at below cost, with the aim of forcing its competitor Icera out of the market - illegal under European Union antitrust rules.

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Margrethe Vestager, the commissioner in charge of competition policy, said that baseband chipsets are key components for mobile devices to connect to the internet. "Qualcomm sold these products at a price below cost to key customers with the intention of eliminating a competitor.

"Qualcomm's strategic behaviour 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.

Baseband chipsets allow smartphones and tablets to connect to cellular networks and are used both for voice and data transmission. The EC said Qualcomm held a dominant position in the global market for UMTS baseband chipsets between 2009 and 2011, with about a 60% market share.

The EC said its investigation found that Qualcomm abused this dominance between mid-2009 and mid-2011 by engaging in "predatory pricing". Qualcomm sold quantities of three of its UMTS chipsets below cost to Huawei and ZTE, with the aim of eliminating Icera, its main rival at the time.

The EC said that Qualcomm's conduct had a "significant detrimental impact on competition", preventing Icera from competing in the market, stifling innovation and reducing choice for consumers. In May 2011, Icera was acquired by US tech company Nvidia, which wound down the baseband chipset business line in 2015.

The EC said the fine represents 1.27% of Qualcomm's turnover in 2018 and is aimed at deterring market players from engaging in such anti-competitive practices in the future.

Last year in a separate investigation the EC fined Qualcomm €997 million for abusing its market dominance in LTE baseband chipsets by making significant payments to Apple on condition that it would not buy from rivals. 

"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. This decision is unsupported by the law, economic principles or market facts, and we look forward to a reversal on appeal," said Don Rosenberg, executive vice president and general counsel of Qualcomm. 

"We cooperated with Commission officials every step of the way throughout the protracted investigation, confident that the Commission would recognize that there were no facts supporting a finding of anti-competitive conduct. On appeal we will expose the meritless nature of this decision," Rosenberg added.         

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