Published On: Wed, Jan 24th, 2018

Qualcomm Fined $1.2 Billion by the EU for Paying Off Apple

The chip giant abused its position to make sure no-one else could bid for Apple contracts, the EU says; The fine is calculated according to 4.9% of its income

Steve Mollenkopf,   CEO of Qualcomm,   responds to a question during the 2014 Consumer Electronics Show (CES) in Las Vegas

 

Qualcomm has been fined €1.3 billion, according to the European Union’s announcement today. The fine was imposed on it because of misuse of its control in the smartphone chip market.

The European Union’s Competition Commission said the chip maker giant company was found guilty of blocking competitors from entering the LTE chip market, using its position as the supplier of iPhone and iPad chips between 2011 and 2016.

Qualcomm fine is equivalent to 4.9% of its income in 2017 and is calculated on the basis of its income during the five years in which it was investigated.  The European Union explained that Qualcomm paid Apple billions of dollars to commit itself exclusively to the use of its chips.

These amounts were also reflected in the discounts Apple received in purchasing components and in direct payments to the American giant.

It was further explained that Qualcomm’s action effectively blocked the possibility that manufacturers with better products would have a business opportunity with Apple.

“Qualcomm’s actions have prevented consumers from potentially accessing a better product,” they said in the European Union.
“This is a violation of the antitrust laws and this is the reason for our decision now.”
One of the main beneficiaries of the decision was Intel, which suffered from the situation until it decided to give up to a large extent its activity in the field of mobile chips.

The agreement between Qualcomm and Apple was signed in 2011, which was renewed two years later, so the company could not claim that it was a one-time mistake. The agreement made it clear that Qualcomm would stop transferring the money to Apple if it replaced or added suppliers. According to the union, the investigation found that Apple indeed considered adding Intel as a supplier but had to wait until the agreement expires in 2016 to do so.

This is not the first fine that Qualcomm receives from regulators; In South Korea, the company received a fine of $ 850 million a year ago for monopolistic conduct. The company was accused of forcing manufacturers to pay royalties on its patents unnecessarily and in a larger scope than required.

This fine joined an additional fine of $ 208 million in 2009 for which South Korea was subject to similar CDMA chips.

 

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