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Qualcomm fined $272M in latest EU antitrust fine

Qualcomm fined $272M in latest EU antitrust fine


It sold 3G chips at predatory prices between 2009 and 2011

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Photo by Ramon Costa/SOPA Images/LightRocket via Getty Images

The EU has fined Qualcomm €242 million (around $272 million) for selling 3G modem chips at predatory prices in an attempt to drive a competing supplier, Icera, out of the market. The European Commission says that the company used its market dominance to sell chips meant for mobile internet dongles at below cost between 2009 and 2011. Today’s announcement marks the end of the EU’s nearly four year long investigation into Qualcomm’s actions.

Announcing the fine, the EU’s Competition Commissioner Margrethe Vestager, said that “Qualcomm’s strategic behavior 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.”

The predatory pricing was used to drive Icera out of the market

The EU’s investigation found that Qualcomm sold its 3G chips at below cost prices to Huawei and ZTE just as Icera was emerging as a viable competitor. The Commission called these price concessions “targeted” and said that they “allowed [Qualcomm] to maximise the negative impact on Icera’s business.”

Today’s fine is just the latest in a series of antitrust rulings that Qualcomm has been hit with in recent years. Earlier this year, a US judge ruled that Qualcomm charges “unreasonable high” royalties for its patents, and criticized its practice of offering discounts to customers who agree to exclusively use its chips. This latter practice was also the subject of a $1.2 billion fine, also from the EU, that was issued last year. Regulators in South Korea, China, and Taiwan have fined Qualcomm over a variety of anticompetitive practices.

However, unlike the previous antitrust rulings, today’s fine is unlikely to have an ongoing impact on Qualcomm’s bottom line. The predatory pricing the EU says Qualcomm engaged in ended in 2011, and in today’s ruling the Commission has not criticized any of the company’s current practices, or the amounts that it charges for its patents or licenses. Instead the fine, which amounts to 1.27 percent of the company’s 2018 revenue, is designed to deter other companies from attempting the same thing.

Unfortunately for Icera, the fine has come too late to save its modem business. The company was acquired by Nvidia in 2011, which exited the modem market in 2015. Nvidia had hoped to integrate the company’s modems into its Tegra processors, but the plans never made it to fruition. 

In response to the fine, Qualcomm said that it intends to appeal. The company’s executive vice president and general counsel, Don Rosenberg, said that the Commission had based its decision on the pricing of a “over a very short time period and for a very small volume of chips” and that Qualcomm’s actions had not caused any harm to Icera, which continued to compete in the market after it was acquired by Nvidia. “This decision is unsupported by the law, economic principles or market facts, and we look forward to a reversal on appeal,” Rosenberg said.

Now, as we move towards the 5G era, the modem market is due to lose another player. Intel announced that it would exit the 5G modem business after Apple and Qualcomm ended their protracted legal battle, leaving just a handful of players left to compete with Qualcomm’s 5G modems.

Update July 18th, 10:27AM ET: Added details of Qualcomm’s intention to appeal the ruling.