EU hits Qualcomm with fresh $272M fine for predatory chip pricing
The European Union today hit Qualcomm Inc. with a 242 million euro ($272 million) fine after finding that the company had sold chips at unreasonably low prices in a bid to harm the competition.
It’s the second antitrust penalty Qualcomm has received from the EU in two years. Last January, regulators ordered the company to cough up $1.23 billion for signing an exclusive chip supply deal with Apple Inc. that shut out competitors. The deal enabled Qualcomm to become the iPhone maker’s sole provider of LTE baseband chips for more than five years.
This latest penalty relates to the company’s older 3G baseband chips for mobile internet dongles. Over the course of a four-year investigation, European regulators established that Qualcomm sold units at below cost to ZTE Corp. and Huawei Technologies Co. Ltd. from 2009 to 2011. The EU charges that this was part of a deliberate strategy to force rival Icera Inc. out of the market.
In the time frame Qualcomm is accused of using predatory pricing, Icera was a rising player on a trajectory to potentially become a major baseband chip supplier. ZTE and Huawei were key prospective customers. The EU said that Qualcomm’s price concessions to the Chinese firms were “targeted” and designed to maximize the harm to Icera while minimizing the impact on its own revenue.
Icera was sold to Nvidia Corp. in 2011. Four years later, Nvidia exited the baseband chip market to focus on others.
“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,” EU competition commissioner Margrethe Vestager said in a statement.
Qualcomm plans to dispute the fine. Don Rosenberg, the company’s general counsel, has publicly pushed back against the decision, saying that Qualcomm’s pricing strategy did not cause harm to Icera. “Icera was later acquired by Nvidia for hundreds of millions of dollars and continued to compete in the relevant market for several years after the end of the alleged conduct,” Rosenberg said.
Although Icera no longer competes in baseband chips, Qualcomm retains its position as the dominant player. The chipmaker has already established itself as the leading maker of modems that support 5G technology, the next-generation wireless networking standard currently being rolled out globally. Qualcomm’s 5G chips power Samsung Electronics Co. Ltd.’s top-end smartphone and will run in future Apple Inc. devices as well.
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