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Qualcomm fined $272M in latest EU antitrust case over predatory pricing

By nanoguy · 10 replies
Jul 18, 2019
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  1. Qualcomm is being slammed by the EU with a fine to the tune of €242 million (around $272 million) for its use of predatory tactics in an attempt to drive a competitor of its 3G modem business out of the market almost a decade ago. This concludes an investigation that started four years ago, that questioned whether the chipmaker had abused its market position against Icera -- a company now owned by Nvidia -- who was its fastest growing competitor at the time. Key details of that investigation weren't made public at the time, but now commissioner Vestager has brought those to light.

    The antitrust investigation found that Qualcomm had been selling its 3G modems to Huawei and ZTE at a loss between 2009 and 2011, effectively stunting the growth of Icera, who was showing a lot of promise in a market where Qualcomm at 60% share was three times bigger. The chipmaker naturally disagrees with the assessment and is planning to appeal, even as the fine is relatively small at just over 1% of its global turnover in 2018, or ten times less than the maximum extent under EU antitrust law.

    Vestager noted that Qualcomm has no excuse for its price concessions, which were made in a strategic, targeted way that minimized the impact on the company's bottom line. Icera's chips took a significant R&D investment risk to create a high performance alternative to Qualcomm's 3G modems that are patented to the last transistor -- meaning there was no sensible reason for the tech giant to suddenly drop their price below the cost of making them.

    This isn't the first offence for Qualcomm, as some of you may recall that the EU last year handed it a €997 million ($1.2 billion) fine for signing a similar strategic agreement in 2011 with Apple in order to be its exclusive supplier of LTE baseband chipsets for iPhone. Go back to 2015 and you'll find that even China burned a $975 million hole in Qualcomm's coffer for another antitrust case involving patents for 3G and 4G chips.

    In any case, while Qualcomm may not admit to wanting to monopolize the modem market, Intel's sudden exit from the 5G chipset business earlier this year is telling. And so are the fines received in China, South Korea and Taiwan.

    The U.S. FTC recently offered Qualcomm a reprieve following a DOJ intervention in its antitrust case, under the excuse that 5G is a national security issue and that punishing the company would put the U.S. at a disadvantage. While that may hold for a while, it's worth noting the evidence used in this case was also used in the Qualcomm vs Apple lawsuit that settled not too long ago.

    Permalink to story.

    Last edited by a moderator: Jul 18, 2019
  2. GregonMaui

    GregonMaui TS Booster Posts: 149   +51

    I'm shocked! Shocked that's the fine is so small
  3. Lew Zealand

    Lew Zealand TS Guru Posts: 752   +643

    That's merely the cost of doing business. Qualcomm's business strategy wins again.
    p51d007 likes this.
  4. cliffordcooley

    cliffordcooley TS Guardian Fighter Posts: 11,504   +5,067

    The US wouldn't be in debt, if they fined all the companies the way EU does. I'm on a fence deciding, if EU is wiser for it.
  5. toooooot

    toooooot TS Evangelist Posts: 879   +425

    Take those 275 mills and give to Icera. In fact, spread all fines across small competitors whenever someone is caught doing what qualcom did.
    Last edited: Jul 18, 2019
    wiyosaya and Odium like this.
  6. redgarl

    redgarl TS Enthusiast Posts: 63   +72

    I am a QCOM investor, and I believe this is despicable. I hope this tactic, the same that Intel used, is not going to happen anymore.

    I invested in QCOM because I believe they have the most to win in the 5G battle. Their technology will be more secure and less risky than the competition even if it is more expensive than Huawei. I also really like what they are doing on chips and how they want to push ARM into laptops. I also believe they have the right to get a fair compensation for their licensing. 7.50$ is a fair price on a phone and I totally disagree with Koh judgement... however what they did on the 3G modems is unacceptable and they deserve those fine.

    Let's hope the company will never do something like this again.
  7. TheBigT42

    TheBigT42 TS Maniac Posts: 336   +228

    Compared to the US Dept $272 million isn't even a penny.
  8. wiyosaya

    wiyosaya TS Evangelist Posts: 4,119   +2,406

    Personally, I would rather the ethics aspect of it come from inherent ethics instead of fines designed to teach ethics.

    No matter what side of the fence in various aspects such as religion and politics, the business world only has one god - Money!
  9. cliffordcooley

    cliffordcooley TS Guardian Fighter Posts: 11,504   +5,067

    I hope you are not stating this fine is the only fine EU has issued.
  10. hk2000

    hk2000 TS Booster Posts: 72   +30

    There are no inherent ethics any more. The only guarantee of ethical behavior is fear of punishment. Unfortunately this applies to individuals as well these days- no God, no fear of punishment, just the fear of getting caught,
  11. TheBigT42

    TheBigT42 TS Maniac Posts: 336   +228

    Of course not. I am saying if you totaled all the fines the EU has imposed on companies...It would not cover 10% of the US Dept
    cliffordcooley likes this.

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