Qualcomm subject to competition probes in EU and US as well as China

Out-Law News | 06 Nov 2014 | 3:40 pm | 2 min. read

Mobile microchip maker Qualcomm has revealed that it is the subject of new EU and US investigations into alleged breaches of competition rules.

The European Commission and US Federal Trade Commission (FTC) probes add to the investigation Qualcomm faces in China. The National Development and Reform Commission (NDRC) in China launched an investigation into whether Qualcomm is in breach of Chinese anti-monopoly laws in November 2013.

Qualcomm disclosed the new EU and US investigations in its annual report for 2014 (105-page / 1MB PDF).

The European Commission told Qualcomm of the investigation on 15 October. The regulator is investigating whether Qualcomm breached EU rules that prohibit businesses from entering into anti-competitive agreements or abusing a dominant market position.

"We understand that the investigation concerns primarily the sale and/or marketing of our baseband chipsets, including alleged conditions relating to the provision by us of rebates and/or other financial incentives," Qualcomm said in its annual report. "If a violation is found, a broad range of remedies is potentially available to the Commission, including imposing a fine and/or injunctive relief prohibiting or restricting certain business practices." 

"Given that this investigation is in its early stages, it is difficult to predict the outcome or what remedies, if any, may be imposed by the Commission. We continue to cooperate with the Commission as it conducts its investigation," it said.

The FTC is investigating whether Qualcomm's patent licensing arrangements are anti-competitive. The regulator, which notified Qualcomm of the probe on 17 September, is reviewing whether Qualcomm has failed to adhere to commitments it previously made to ensure others could licence its standard-essential patents on fair, reasonable and non-discriminatory (FRAND) terms.

"If a violation … is found, a broad range of remedies is potentially available to the FTC, including imposing a fine or requiring modifications to our licensing practices," Qualcomm said.

The NDRC's investigation in China also relates to patent licensing matters.

"We understand that the investigation concerns primarily our licensing business and certain interactions between our licensing business and our chipset business, including how royalties are calculated in our patent licenses, the value exchanged for cross-licenses to patents of our licensees, whether we will offer license agreements limited to patents essential to certain standards, whether royalties are sought for our expired patents, our policy of selling chipsets only to our patent licensees, the alleged refusal of us to grant patent licenses to chipset manufacturers, and certain other terms and conditions in our patent license and chipset sale agreements," Qualcomm's report said.

The NDRC could impose a fine of up to 10% of Qualcomm's annual revenues if it finds the company to be in breach of Chinese competition laws.

"Given the limited precedent of enforcement actions and penalties under the [anti-monopoly laws], it is difficult to predict the outcome of this matter or what remedies may be imposed by the NDRC," Qualcomm said. "We continue to cooperate with the NDRC as it conducts its investigation."