Risk & Compliance

EU Fines Qualcomm for ‘Predatory Pricing’

Regulators said the chipmaker sold products below cost to hurt a rival.

European regulators fined chipmaker Qualcomm $271 million after a long-running antitrust investigation into the company using predatory pricing about a decade ago.

The fine represents 1.27% of the company’s global revenue for 2018. Qualcomm was also ordered not to engage in abusive pricing practices in the future.

According to the European Commission, Qualcomm abusively sold three of its UMTS chipsets to strategically important customers, Huawei and ZTE, to force its main rival, Icera, out of the market.

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The case started after Icera filed a complaint in 2015, and relates to Qualcomm’s business practices from 2009 to 2011. Icera was acquired by Nvidia in May 2011 and closed its baseband chipset business in 2015.

“Baseband chipsets are key components so mobile devices can connect to the internet,” Margrethe Vestager, the EU Commissioner in charge of competition, said in a statement.

“Qualcomm sold these products at a price below cost to key customers with the intention of eliminating a competitor. 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.

In response, Qualcomm said in a press release it planned to appeal the fine to the General Court of the European Union. “The Commission’s decision is based on a novel theory of alleged below-cost pricing over a very short time period and for a very small volume of chips.”

“There is no precedent for this theory, which is inconsistent with well-developed economic analysis of cost recovery, as well as Commission practice,” the release said.

The company said it would provide a financial guarantee instead of paying the fine while the appeal took place.

Qualcomm was fined last year $1.23 billion by the European Commission for similar anti-competitive practices related to LTE baseband chipsets. In 2017, it was fined $774 million by Taiwan’s Fair Trade Commission for allegedly abusing its position in the cellular chipset market by refusing to properly license its technology.

The company’s stock was down 1.4% in afternoon trading.

Dursun Aydemir/Anadolu Agency/Getty Images