FTC charges Qualcomm with anti-competitive practices, accuses forcing deal on Apple: Report

FTC filed a complaint against Qualcomm citing that the company had prevented Apple from working with its competitors over a period of five years.

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Highlights

    • Qualcomm charged with anti-competitive practices.
    • FTC accuses of forcing deal on Apple.
    • Qualcomm faced a fine of $854 million in South Korea last month.

Federal Trade Commission (FTC) file a new complaint against Qualcomm charging the company to be engaged in anti-competitive practices maintaining a monopoly for semiconductors used in products including Apple’s iPhones and iPads.

According to FTC, Qualcomm offered Apple favorable terms so that it could supply the baseband chips for all iPhones over a period of five years from 2011 to 2016. In the year, it forced Apple not to use WiMax, the original 4G system used on Sprint’s network, in any iPhones.

FTC in its lawsuit filed on Tuesday claimed,” Qualcomm recoginsed that any competitor that won Apple’s business would become stronger, and used exclusivity to prevent Apple from working with and improving the effectiveness of Qualcomm’s competitors.”

Qualcomm’s action hurt competition and effectively imposed a tax on some products that was passed on to consumers, said FTC.

Qualcomm however, said that the complaint is based on flawed legal theory, trying to prioritise the interests and bargaining power of mobile-phone manufacturers.

“Qualcomm has never withheld or threatened to withhold chip supply in order to obtain agreement to unfair or unreasonable licensing terms”, the company said in a statement.

Carping the lawsuit timing, Qualcomm claimed that FTC pushed the complaint just before the newly elected President takes office on Friday. “This is an extremely disappointing decision to rush to file a complaint on the eve of Chairwoman Ramirez’s departure and the transition to a new administration which reflects a sharp break from FTC practice,” said Qualcomm General Counsel Don Rosenberg.

Qualcomm, the biggest producer of the mobile phone chips, earns its revenue mostly from chip making and majority of its profit from patent licensing business. With the allegation of anti-competitive tactics over licensing filed against the company, Qualcomm’s market share had fall 4 per cent on Tuesday.

This is not the first time where Qualcomm’s licensing practices were put under question. South Korea’s antitrust agency last month fined the company $854 million (1.03 trillion won) for allegedly charging royalties to smartphone companies for unnecessary patents. In 2015, the company faced a similar penalty in China of $975 million. The penalty followed a 14-month long antitrust investigation.