EU Says Qualcomm Tactics May Have Unfairly Crushed Rivals

Consumers increasingly access the internet through mobile devices – therefore it is important that effective competition takes place for the supply of one of the key components of such devices: baseband chipsets process communication functions in smartphones, tablets and other mobile broadband devices.

Qualcomm has been accused of illegally stifling competition in the mobile chip market.

The EU’s predatory pricing investigation stems from concerns raised by Icera Inc., a U.K.-based maker of baseband technology that filed a complaint with the commission in 2010.

In a separate press release, Qualcomm said that it received courtesy copies of two Statements of Objections or SO from the European Commission relating to separate matters involving Qualcomm’s chipset business.

Qualcomm will have three months o respond to the Commission’s allegations over the exclusivity payment and four months to respond to the predatory pricing objections.

In an email, the General Counsel for Qualcomm, Donald J. Rosenberg stated that Qualcomm would establish that there is strong competition in wireless chips sales.

Vestager’s office says that Qualcomm has an unnamed smartphone manufacturer since 2011 manufacturer with the understanding that the company would only use Qualcomm chipsets in its devices.

“Qualcomm reacted to that threat by selling certain quantities of its UMTS baseband chipsets to two of its customers at prices that did not cover Qualcomm’s costs, with the aim of forcing Icera out of the market”, the Commission said Tuesday.

Being the dominant player in the semiconductor industry, the company is trusted with the responsibility of not abusing its power and inhibit competition.

The Commission has informed Qualcomm and the competition authorities of the Member States that it has issued Statements of Objections in these cases.

If the charges are confirmed, Qualcomm could face fines of up to 10% of its global annual revenue for each charge and be forced to change its business practices.

Yet Qualcomm’s 30-year rise from a research boutique founded by university scientists to a €23.4 billion company whose inventions include much of the technology underlying 3G has attracted antitrust scrutiny across the globe.

Qualcomm has until April 2016 to formally respond to the charges. The latest move follows on from the announcement of two investigations in July 2015 (see Qualcomm’s sales practices are under scrutiny).