The U.S. chip maker Qualcomm is facing legal problems in South Korea, the country’s antitrust watchdog fines Qualcomm 1.03 trillion won or $854 million for what they called unfair business practices in patent licensing and modem chips sales.
Qualcomm violated the antitrust law by limiting the access of competing chipset maker to its patent; they are also forcing other manufacturing companies with their shady license agreements which cut the supply of the phone chips with companies that would disagree with their terms and conditions, Korea Fair Trade Commission said last Wednesday. Secretary General of KFTC Shin Young-son said Qualcomm is using its position as one of the key chip suppliers in the market as an abusing tool with its negotiations with different mobile-phone makers to force them to agree with the unfair term.
According to KFTC, the investigation for Qualcomm has started since last 2014, after several industry participants filed complaints towards the company. KFTC did not disclose the companies’ name that filed the complaints. KFTC’s Young-son said that after the investigation, the KFTC decided on these actions because Qualcomm’s action’s limit overall competition. The ruling isn’t about protecting domestic companies such as Samsung and LG Electronics Young-son ended.
Several world market leaders such as Apple, Intel, Mediatek, and Huawei vented their views during the regulator’s deliberation process in the press briefing in South Korea’s administrative capital, Young-son noted. The decision spells lower priced cellphone makers and others in the tech supply community that Qualcomm provides chips for, according to a Taiwanese industry executive.
Qualcomm’s Previous Lawsuits and Dwindling Shares
Qualcomm strongly opposes the ruling, according to the company, “Qualcomm strongly disagrees with the KFTC’s announced decision,” they will also file for an immediate stay of the corrective order and appeal the decision to the Seoul high court, and will appeal to the fine’s amount and the method used to calculate it.
The chip manufacturer’s antitrust ruling dates back last 2015, where Qualcomm paid $975 million fine in China and a 14-month probe, also last 2015 the European Union accused the company of abusing its market power to thwart rivals. AB Bernstein’s analyst Stacy Rasgon noted that the fine is already tremendous but the KFTC’s order to Qualcomm to change its business practice sees a bigger derailing in the future of the chip manufacturer.
The Korean Fair Trade Commission has fined Qualcomm in the past, last 2009 the KFTC fined 273 billion won for abusing its dominant market presence in CMDA modem chips, which are used in LG and Samsung’s handset. Qualcomm’s share was down to $1.16 to $66.09 in the afternoon trade.
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