Qualcomm in record S Korea antitrust fine

South Korea’s antitrust watchdog on Thursday fined Qualcomm a record Won260bn ($207m) for “unfair” business practices related to its chipset sales, sparking strong protests from the US wireless chip and technology supplier.

The Fair Trade Commission accused Qualcomm of abusing its dominant position in the Korean market for CDMA mobile phone chips.

Qualcomm had levied higher royalties on handset makers that bought modem chips from its competitors, while offering rebates to customers who bought products mainly from the US group, the regulator said in a statement.

“Qualcomm owns the origin of CDMA technology and controls about 99.4 per cent of Korea’s CDMA modem chip market. It has strengthened its monopolistic position through those acts,” the FTC said.

The fine is the largest the commission has imposed on a single company. The FTC fined Microsoft Won32.5bn in 2006 for anticompetitive business practices in Korea.

The ruling came after more than three years of investigations into Qualcomm, following complaints from two US companies – Texas Instruments and Broadcom – and two small Korean firms – Nextreaming and Thin Multimedia Broadcom. Broadcom reached a settlement with Qualcomm in April and withdrew its complaint.

The FTC said some companies such as Via of Taiwan and EoNex of Korea had tried to enter the modem chip market in 2004 and 2005 by supplying to Samsung Electronics and LG Electronics, but they had failed to gain “meaningful” market share because of Qualcomm’s practices.

The regulator ordered Qualcomm to stop such unfair practices and to stop taking technology royalties after the effective royalty agreement period expires.

Qualcomm said the FTC decision was “regrettable” and that its business practices were “legal, appropriate and competition-friendly”. It said it would appeal.

Its Korean office said Qualcomm could not accept the FTC’s decision because offering different incentives depending on the purchased volume was a “natural marketing” tactic. This week, Qualcomm warned the fine could have a “material impact” on its operations.

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