Qualcomm has been fined €997 million over their abuse of their dominant market position
Qualcomm has been fined €997 million over their abuse of their dominant market position
This fine equates to 4.9% of Qualcomm’s turnover in 2017, acting as a deterrent for future illegal action and anti-competitive practices. The commission’s investigation covered the years between 2011 and 2016, a time where Qualcomm had a 90% market share of the global LTE baseband chipset market. During this time Qualcomm was found to have made agreements with companies like Apple that prevented them from changing suppliers, offering conditional payments if the company used Qualcomm baseband chipsets exclusively. Â
Companies that had signed agreements with Qualcomm were deterred from using competing products, preventing Qualcomm’s rivals from gaining market share and stifled any potential innovations that these companies could bring to the market. Preventing companies from using a competitor’s products by making large payments is illegal under EU anti-trust laws.Â
Below is a comment from EU Commissioner Margrethe Vestager;
   Qualcomm illegally shut out rivals from the market for LTE baseband chipsets for over five years, thereby cementing its market dominance. Qualcomm paid billions of US Dollars to a key customer, Apple, so that it would not buy from rivals. These payments were not just reductions in price – they were made on the condition that Apple would exclusively use Qualcomm’s baseband chipsets in all its iPhones and iPads.
This meant that no rival could effectively challenge Qualcomm in this market, no matter how good their products were. Qualcomm’s behaviour denied consumers and other companies more choice and innovation – and this in a sector with a huge demand and potential for innovative technologies. This is illegal under EU antitrust rules and why we have taken today’s decision.
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Internal Apple documentation was found during this investigation that shows that Apple was seriously considering Intel-made baseband chipsets as an alternative to Qualcomm, with Qualcomm’s exclusivity deal playing a huge role in this decision, as Intel would have to return a lot of money to Qualcomm if they moved any of their business to Intel. Â
Apple eventually decided to use Intel’s chipsets on some of their products, but only after September 2016 when “cost of switching under its terms was limited”, which means that Apple would likely have moved to use Intel chipsets sooner had Qualcomm’s illegal agreement had not been in place.Â
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Right now US and Chinese lawsuits regarding this matter are ongoing, which means that the legal ramifications of Qualcomm’s exclusivity deals are still ongoing. Other monopoly watchdogs are also investigating the company.Â
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