Qualcomm has received another fine from the EU for competition violations. In a long-running investigation going back ten years, the European Commission fined the company EUR 242 million for abusing its market dominance in 3G baseband chipsets. Qualcomm said it would appeal the decision.
Qualcomm sold below cost, with the aim of forcing its competitor Icera out of the market, the Commission said. This is illegal under EU antitrust rules, as the abuse of its dominant position prevented competition and innovation in the market, and limited the choice available to consumers.
The decision found that Qualcomm held a dominant position in the global market for UMTS baseband chipset between 2009 and 2011. The company had a market share of around 60 percent, or almost three times the market share of its biggest competitor. The market also showed high barriers to entry, with significant initial investments required in research and development as well as steps to overcome Qualcomm's intellectual property rights.
The investigation found that Qualcomm abused this dominance between mid-2009 and mid-2011 by engaging in “predatory pricing”. Qualcomm sold certain quantities of three of its UMTS chipsets below cost to Huawei and ZTE, two strategically important customers, with the intention of eliminating Icera, its main rival at the time in the market segment offering advanced data rate performance.
The Commission's conclusion was based on a price-cost test for the three Qualcomm chipsets concerned, as well as a broad range of qualitative evidence "demonstrating the anti-competitive rationale behind Qualcomm's conduct, intended to prevent Icera from expanding and building market presence", the EC said.
The fine represents 1.27 percent of Qualcomm's turnover in 2018 and is also aimed at deterring market players from engaging in such anti-competitive practices in the future. It follows a fine of nearly EUR 1 billion from the Commission in early 2018 for Qualcomm abusing its dominant position in LTE chips.
Appeal planned
Qualcomm said it plans to appeal the finding to the General Court of the European Union. The company will provide a financial guarantee in lieu of paying the fine while the appeal is pending.
The company rejected the Commission's argument, saying the customers chose its products due to superior quality rather than lower price and there is no economic basis for the theory of below-cost pricing. Furthermore, the alleged infractions occurred "over a very short time period and for a very small volume of chips", and Icera remained active in the market for several years following its takeover by Nvidia.
