Qualcomm to Appeal EC $1.23B Fine for Breaching EU Competition Law

Qualcomm will appeal the European Commission fining the company $1.23 billion on grounds its now-expired modem chip pricing and supply agreement with Apple violated EU competition law, said the company Wednesday. The EC decision “does not relate to Qualcomm’s licensing business and has no impact on ongoing operations,” it said. “We are confident this agreement did not violate EU competition rules or adversely affect market competition or European consumers,” said Qualcomm General Counsel Don Rosenberg. “We have a strong case for judicial review and we will immediately commence that process.” The company “abused” its “market dominance” in modem chips “by preventing rivals from competing in the market,” said the EC Wednesday. “It did so by making significant payments to a key customer on condition that it would exclusively use Qualcomm chipsets. The issue with such an arrangement is not that the customer receives a short-term price reduction, but that the exclusivity condition denies rivals the possibility to compete.” The “latest episode in the fractious relationship between Apple and Qualcomm appears to have reached new heights” in the $1.23 billion penalty, said David McQueen, ABI research director, in a Wednesday statement. “It comes as a surprise that this level of 'sweetener' has been paid by Qualcomm, as it has solid leadership in the baseband chipset business,” he said of the exclusivity clause. With its market dominance, “did Qualcomm really need to have such a clause with Apple?” he asked.