Qualcomm is facing another anti-trust investigation, this time in its home country the US. The Federal Trade Commission has accused Qualcomm of using anticompetitive tactics to maintain its monopoly in the supply of mobile phone processors. According to the complaint, Qualcomm ensures higher royalties for its standard-essential patents by threatening to disrupt supplies of its products to phone manufacturers. The FTC said these royalties "amount to a tax on the manufacturers’ use of baseband processors manufactured by Qualcomm’s competitors, a tax that excludes these competitors and harms competition". The increased costs from the higher royalties also affect consumers and limit innovation, the FTC said.
In addition to a "no licence, no chips" policy with customers, Qualcomm has refused to license its standards-essential technology to competing suppliers of baseband processors on FRAND terms, the FTC said. The regulator also found that Qualcomm forced Apple to use its chips exclusively from 2011 to 2016. "Qualcomm recognized that any competitor that won Apple’s business would become stronger, and used exclusivity to prevent Apple from working with and improving the effectiveness of Qualcomm’s competitors," the FTC said.
The FTC is seeking a federal court order to Qualcomm to cease its anticompetitive conduct and take actions to restore competitive conditions. The US regulator is latest in a series of countries to accuse Qualcomm of abusing its dominant position and imposing unfair licensing terms. The company was fined CNY 6.1 billion in China in 2015 and forced to change its licensing methods. At the end of 2016 another fine of KRW 1 trillion was imposed in South Korea for restrictive licensing practices, and in the EU Qualcomm has been under investigation for competition violations dating back to 2011.
Qualcomm rejected the FTC's arguments, saying it has "never withheld or threatened to withhold chip supply in order to obtain agreement to unfair or unreasonable licensing terms". The company suggested the case was based on complaints from rivals, that "have generated billions in profit from sales of products made possible by the fundamental 3G and 4G cellular technology developed by innovators like Qualcomm".
Furthermore, Qualcomm noted that the FTC took the decision on the eve of the change in government in the US, when only three of the five commission seats are filled. One of the three commissioners dissented from the decision, calling it a "flawed legal theory . . . that lacks economic and evidentiary support". Qualcomm said it was still in the process of supplying information to the FTC when the complaint was filed in court, suggesting the regulator was trying to rush through the case before the change in US President and FTC chairman.
