Qualcomm Hit With $1.2 Billion EU Fine For Abusing LTE Baseband Chip Monopoly

The European Commission has been known to levy stiff penalties on some of the world's biggest technology firms over various anticompetitive practices, with Qualcomm now being the latest. In a press release issued today, the European regulatory agency announced it was fining Qualcomm €997 million, equivalent to more than $1.2 billion in U.S. currency, for abusing its dominant market position in LTE baseband chipsets.

Image Source: Wikimedia Commons via Maurizio Pesce
Specifically, the European Commission took issue with Qualcomm paying Apple billions of dollars over the past half decade to exclusively use its modem hardware inside the company's iPhone and iPad products. In other words, Qualcomm paid Apple to shun it rivals, the European Commission determined.

"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 U.S. 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," European Commissioner Margrethe Vestager said in a statement.

"This meant that no rival could effectively challenge Qualcomm in this market, no matter how good their products were. Qualcomm's behavior 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," Vestager added.

Qualcomm is the market leader in LTE baseband chipsets, though it is not the only major players. Intel, for example, also LTE baseband chipsets for mobile devices. According to the European Commission, Intel had little chance of competing due to an agreement Qualcomm signed with Apple in 2011 and later extended in 2013. The European Commission further determined that Apple had at one point given "serious consideration" to buying from Intel, but decided against it because of the agreement it signed with Qualcomm.

Naturally Qualcomm sees things in a different light. The company said it "strongly disagrees" with the European Commission's decision and plans to appeal.

"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."

One thing to keep an eye on is how the fine and subsequent appeal affect Broadcomm's interest in Qualcomm. Broadcomm has been trying to acquire Qualcomm, making a $130 billion offer in November of last year. Quacomm's board unanimously rejected the bid, saying it undervalues the company.