Qualcomm’s Mastery Of Mobile Chip Market Ruffles European Commission’s Feathers

The very ornery European Commission has set its sights on mobile chipmaker Qualcomm, which is the focus of two formal antitrust investigations into possible abusive behavior related to baseband chipsets used in consumer electronic devices. What investigators are looking into is whether or not Qualcomm essentially bribed customers with financial incentives not to buy from the competition, and if it engaged in predatory pricing -- charging below costs to drive competition out of the market.

"We are launching these investigations because we want to be sure that high tech suppliers can compete on the merits of their products. Many customers use electronic devices such as a mobile phone or a tablet and we want to ensure that they ultimately get value for money. Effective competition is the best way to stimulate innovation," said Margrethe Vestager, EU Commissioner in charge of competition policy.

Qualcomm is the world's largest supplier of baseband chipsets, which process communication functions (voice and data) in smartphones, tablets, and other mobile broadband devices. EU regulators are trying to figure out if Qualcomm granted payments, rebates, or any other financial incentives to customers on the condition that they only purchase 3G (UMTS) and 4G (LTE) chipsets from them.

As for the predatory pricing claim, EU regulators want to find out if Qualcomm sold 3G chipsets at below cost, which would be an abuse of the company's dominant market position. By selling parts below cost, Qualcomm could have made it difficult or impossible for smaller chip suppliers to compete.

This isn't the first time Qualcomm has been in the Commission's crosshairs. Back in 2007, there was an investigation into Qualcomm's patent licensing terms and the royalties it charged. The investigation was opened at the behest of Broadcom, Ericsson, NEC, Nokia, Panasonic, and Texas Instruments, but was ultimately closed in 2009 without any charges.

The current investigations are the result of a complaint by NVIDIA and its Icera division. NVIDIA purchased Icera in 2011 with the intention of integrating 3G and 4G baseband functionality into its products for mobile phones. Those plans were scrapped earlier this year.