Qualcomm to fight second EU antitrust fine

Qualcomm said it will appeal the decision to the General Court of the European Union and expose the “meritless nature” of the ruling. (Getty Images)

Qualcomm plans to fight back after the European Commission on Thursday slapped the chipmaker with a €242 million ($272 million) fine for what competition authorities called predatory pricing of its 3G baseband chipsets.

Qualcomm said it will appeal the decision to the General Court of the European Union and expose the “meritless nature” of the ruling.

Thursday’s decision is the second antitrust penalty in 18 months levied against Qualcomm by the European Commission. It found the company abused its market dominance in 3G chipsets by selling below cost to Huawei and ZTE between mid-2009 and mid-2011 with the goal of forcing then-rival Icera out of the market.

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Nvidia acquired Icera for $367 million in May 2011 and then decided to exit the cellular modem market in 2015, shortly after which Icera filed a complaint and the European Commission launched its formal investigation.

“The Commission spent years investigating sales to two customers, each of whom said that they favored Qualcomm chips not because of price but because rival chipsets were technologically inferior. This decision is unsupported by the law, economic principles or market facts, and we look forward to a reversal on appeal,” said Don Rosenberg, executive vice president and general counsel of Qualcomm, in a release.

Qualcomm said it plans to provide a financial guarantee instead of paying the penalty while the appeal is pending.

RELATED: Qualcomm asks U.S. appeals court to put antitrust judgment on hold

Commissioner Margrethe Vestager, in charge of competition policy, said in a release: "Baseband chipsets are key components so mobile devices can connect to the Internet. Qualcomm sold these products at a price below cost to key customers with the intention of eliminating a competitor. Qualcomm's strategic behaviour prevented competition and innovation in this market, and limited the choice available to consumers in a sector with a huge demand and potential for innovative technologies. Since this is illegal under EU antitrust rules, we have today fined Qualcomm €242 million."

Other tech companies have been in the line of fire as well. Vestager previously ordered Apple to pay back taxes of more than $15 billion, and hit Google with more than $9 billion in fines.

In January of last year, the European Commission issued a similar $1.13 billion fine against Qualcomm for abusing LTE chipset market dominance and making payments to Apple to remain the iPhone-maker’s exclusive chip supplier. Qualcomm is appealing that decision.

Europe is not the only place where Qualcomm is fighting legal battles related to anticompetitive behavior. Qualcomm is currently pursuing an expedited appeal in U.S. federal court to overturn a district judge’s earlier decision siding with the Federal Trade Commission (FTC) that certain of the chipmaker’s business practices, including the price of royalties it charges for certain patents, violated antitrust rules.

Qualcomm has asked the U.S. appeals court in that case to put the antitrust judgment on hold while the appeal is pending.  The decision in part would require the company to renegotiate licensing arrangements and license technology patents to rival chipmakers.

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