EU accuses Qualcomm of competition violations

The European Union has found that Qualcomm violated competition law by paying a customer to use its chips and selling products below cost to drive out rivals. The European Commission sent a formal statement of objections to the US-based company outlining the findings of its preliminary investigation. Qualcomm will have the opportunity to respond to the allegations before the EC decides whether to impose sanctions on the company. 

The EC's investigation, first announced in July, found that since 2011, Qualcomm has paid significant amounts to a major smartphone and tablet manufacturer on condition that it exclusively use Qualcomm baseband chipsets in its smartphones and tablets. The ECs preliminary view is that this reducedthe manufacturer's incentives to source chipsets from Qualcomm's competitors and harmed competition in the markets for UMTS and LTE chipsets. The contract between Qualcomm and the manufacturer containing the exclusivity clauses is still in force.

The second allegation is that between 2009 and 2011 Qualcomm engaged in "predatory pricing" by selling certain baseband chipsets at prices below costs, with the intention of hindering competition in the market. This conduct appears to have taken place at a time when Icera posed a growing threat to Qualcomm in the leading edge segment of the market, offering advanced data rate performance, the EC said. In the Commission's view, Qualcomm reacted to the threat by selling certain quantities of its UMTS baseband chipsets to two of its customers at prices that did not cover Qualcomm's costs, with the aim of forcing Icera out of the market. Qualcomm said the contract in question related to chipsets for USB dongles provided for laptop connectivity.

Qualcomm will have three months to respond to the Commission's allegations over the exclusivity payment and four months to respond to the predatory pricing objections. Qualcomm general counsel Don Rosenberg said in a statement that the company "looks 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 competition law". 

Qualcomm also announced that the Taiwan Fair Trade Commission requested information from the company as part of an investigation into the chipmaker's patent licensing agreements and possible violations of the Taiwan Fair Trade Act. Qualcomm said it believes it complies with the Act and will cooperate with the TFTC’s investigation. The news from Europe and Taiwan follows allegations in Korea last month that Qualcomm was violating competition law and a major fine in February against the company in China for competition violations.