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Qualcomm Hit With Massive Fine From EU Over Apple Payments

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Qualcomm is the latest tech company to feel the wrath of the EU. The Competition Commission has smacked the company with a €997m ($1.2bn; £870m) fine for paying Apple to use its chips exclusively.

The European Commission ruled that Qualcomm had abused its dominant position in the market by making payments to Apple if they did not buy chips from rival companies. This falls foul of the European Union’s antitrust rules.

Commissioner Margrethe Vestager, in charge of competition policy, said: “Qualcomm illegally shut out rivals from the market for LTE baseband chipsets for over five years, thereby cementing its market dominance. Qualcomm paid billions of US Dollars to a key customer, Apple, so that it would not buy from rivals. These payments were not just reductions in price – they were made on the condition that Apple would exclusively use Qualcomm’s baseband chipsets in all its iPhones and iPads.

This meant that no rival could effectively challenge Qualcomm in this market, no matter how good their products were. Qualcomm’s behaviour denied consumers and other companies more choice and innovation – and this in a sector with a huge demand and potential for innovative technologies. This is illegal under EU antitrust rules and why we have taken today’s decision.”

The chipsets provided by Qualcomm are what allow mobile phones to connect to networks to make phone calls and for data. More recently their LTE chipsets allow for superfast 4G connections. While it has a significant share of the market Qualcomm isn’t the only chip maker in the market. Intel, more often associated with chipsets for computers, are one of these companies.

While market dominance is not illegal under EU rules, the union feels that such dominant companies have special obligations not to abuse this power to restrict competition. The Commission felt that the agreement made between Qualcomm and Apple contravened these rules.

The commission also referenced internal documents from Apple that showed the company resisted switching chipset supplier because of the restrictive nature of this agreement. Indeed as the deal came to a close in 2016 Apple switch some of its chipset supply yo Intel.

For its part Qualcomm released a statement reacting to the fine saying they intended to appeal the decision from the European Commission.

Qualcomm strongly disagrees with the decision and will immediately appeal it to the General Court of the European Union. The EC decision does not relate to Qualcomm’s licensing business and has no impact on ongoing operations.

“We are confident this agreement did not violate EU competition rules or adversely affect market competition or European consumers,” said Don Rosenberg, executive vice president and general counsel of Qualcomm. “We have a strong case for judicial review and we will immediately commence that process.”

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