FTC Alleges Qualcomm Engaged in Monopoly Conduct on Baseband Processors

The FTC filed a complaint against Qualcomm Tuesday, alleging the company maintained a monopoly in baseband processors used in cellphones and other products. Commissioners voted 2-1 to file the complaint with U.S. District Court in San Jose. Commissioner Maureen Ohlhausen dissented, saying in a separate statement the "enforcement action based on a flawed legal theory ... that lacks economic and evidentiary support, that was brought on the eve of a new presidential administration, and that, by its mere issuance, will undermine U.S. intellectual property rights in Asia and worldwide. These extreme circumstances compel me to voice my objections." The redacted complaint said that "Qualcomm has engaged in exclusionary conduct that taxes its competitors' baseband processor sales, reduces competitors' ability and incentive to innovate, and raises prices paid by consumers for cell phones and tablets." In a news release, the agency, which said the company violated the FTC Act, also alleged Qualcomm received "elevated royalties and other license terms for its standard-essential patents that manufacturers would otherwise reject" by threatening to disrupt the baseband processor supply. Plus, it precluded Apple from getting processors from Qualcomm competitors from 2011 to 2016, the agency said. The commission said it's asking the court to order the company to cease its anticompetitive conduct. Qualcomm responded to us that "the portrayal of facts offered by the FTC as the basis for the agency’s case is significantly flawed. In particular, Qualcomm has never withheld or threatened to withhold chip supply in order to obtain agreement to unfair or unreasonable licensing terms. The FTC’s allegation to the contrary -- the central thesis of the complaint -- is wrong.”