The European Commission has fined Qualcomm €997 million ($1.2 billion) for using its dominant position in the industry to thwart competition through unfair business practices. In its ruling, the EU body says that Qualcomm prevented other LTE modem suppliers to offer their baseband to a “key customer” by making significant payments to it.
The “key customer” here refers to Apple. The agreement between Apple and Qualcomm was signed in 2011 which entitled the former to a significant payment if it solely used Qualcomm’s baseband chips in its iPhone and iPad devices. The agreement was further extended for a period of three years until the end of 2016 in 2013. The agreement prevented Apple from switching to another supplier and if it did, it would have to return Qualcomm a large part of the money it had received in the past. Internal documents suggest that Apple wanted to switch to Intel as an LTE modem supplier but decided against it and waited for the agreement to expire. It was only in September 2016 when the agreement was about to expire and the cost of transfer was limited that Apple started making use of baseband from Intel in its devices. This meant that no rival could effectively challenge Qualcomm in this market, no matter how good their products were. Qualcomm’s behaviour denied consumers and other companies more choice and innovation – and this in a sector with a huge demand and potential for innovative technologies. This is illegal under EU antitrust rules and why we have taken today’s decision.” The EU Commission finds Qualcomm guilty of using its dominant market position to create an unfair business condition for rivals in the market. The large sum of money it paid to Apple also ensured that the company did not switch to another supplier as it would lose out on the incentives offered by Qualcomm. Thus, the EU Commission has fined Qualcomm €997,439,000 based on the total duration of the infringement of five years, six months and 23 days, the gravity of the infringement, and how the move benefitted Qualcomm.
