EC fires antitrust charges at Qualcomm over its pricing tactics

Wireless chipset maker accused of acting illegally to snuff out rivals

European commission photo via Shutterstock

Loss-making mobile chip blueprint scribbler Qualcomm was today slapped with antitrust charges by the European Commission for allegedly using bully-boy tactics to snuff out the competition.

The EC complained that since 2011 the US designer illegally sent “significant” bags of cash to a “major” smartphone and tab maker that agreed to contractual “exclusivity clauses” preventing the use of rivals’ UMTS and LTE chipsets – Ts&Cs that remain in place today.

The second bone of contention is related to “predatory pricing” that the firm allegedly used between 2009 and 2011 by flogging certain baseband chipsets below cost to put a foot on the throat of Nvidia-owned Icera when it was threatened by the rival’s “advanced data rate performance”.

“I am concerned that Qulacomm’s action may have pushed out competitors or prevented them from competing. We need to make sure that European consumers continue to benefit from competition and innovation in an area which is at the heart of today’s economy,” said EU Commissioner Margrethe Vestager.

Ever on the ball, the EC noted baseband units that process comms functions in mobile broadband devices for both voice and data transmissions are ubiquitous – and a healthy market is a happy market.

The probe was launched in July. If found guilty under local laws, Qualcomm could be asked to cough ten per cent of its global revenue, which was almost $25.3bn in fiscal ’15. The company could also be required to overhaul its commercial conduct in the areas highlighted.

Qualcomm, which has three months to respond to the EU antitrust allegation of exclusivity payments and four months to respond to the predatory pricing allegations, said it is “co-operating” with the authorities.

“We look forward to demonstrating that competition in the sale of wireless chips has been and remains strong and dynamic, and that Qualcomm’s sales practices have always complied with European law,” the company stated.

This hasn’t been a vintage year for Qualcomm in terms of financial results. The business reported a five per cent dip in revenues to $25.3bn in fiscal year 2015, ended 27 September. Operating income was down 23 per cent to $5.8bn.

The company is already the subject of an investigation in South Korea into accusations it violated local competition laws when negotiating license agreements; claims the organisation has denied. And it was locked in a legal spat Stateside with Nvidia, but a judge recently came down in favour of Qualcomm. ®


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