EU antitrust unit fines Qualcomm $ 1 billion for bribing Apple over supply of chips

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EU Competition Commissioner Margrethe Vestager holds a joint press conference at EU headquarters in Brussels on January 24, 2018. JOHN THYS / AFP / Getty Images

This week, the American chipmaker Qualcomm has become the latest target of European antitrust regulators.

The European Commission, an executive arm of the European Union (EU), on Wednesday announced it had fined Qualcomm € 997 million ($ 1.23 billion) for illegally paying Apple for years to be the exclusive supplier of iPhone and iPad chips.

The commission alleged that Qualcomm signed an agreement with Apple in 2011, committing to make large payments to Apple on the condition that Apple exclusively uses Qualcomm Long Term Evolution, or “LTE”, baseband chips in all iPhones and iPads.

When the deal expired in 2013, Qualcomm extended the term until the end of 2016. The deal effectively blocked access to Apple by Qualcomm’s rivals in the industry.

“Qualcomm’s behavior has deprived consumers and other businesses of more choice and innovation, in an industry with enormous demand and potential for innovative technologies. It’s illegal under EU antitrust rules and that’s why we made today’s decision, ”said Margrethe Vestager, European Commission Commissioner for Competition Policy, in a statement. .

After reviewing internal Apple documents, the committee found that Apple had seriously considered sourcing chips from Intel, Qualcomm’s main rival in the baseband chip business, but did not. had not done due to the agreement with Qualcomm. While the deal was about to expire at the end of 2016, Apple begshopping around for chips from other manufacturers and Intel chips used in iPhone 7.

The amount of the fine represents around five percent of Qualcomm’s 2017 revenue.

The company has denied violating European competition rules and said it would appeal the case.

“We are convinced that this agreement has not violated EU competition rules and has not adversely affected competition in the European market or consumers. We have a strong case for judicial review, and we will begin this process immediately, ”said company general counsel Don Rosenberg. in a report Wednesday.

Qualcomm is the world’s largest manufacturer of baseband chips. It held 50 percent of the market share in 2017, according to a Wells Fargo Analysis.

While market dominance per se does not violate EU antitrust rules, the commission said dominant firms “have a special responsibility not to abuse their powerful market position by restricting competition.

Update: A previous version of this article did not specify that Apple was using Intel chips in the iPhone 7 before the Qualcomm agreement expired.

EU antitrust regulators fine Qualcomm $ 1.23 billion for bribing Apple



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