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Qualcomm slapped with $271 million fine by European regulator for predatory pricing

Mike Freeman, The San Diego Union-Tribune on

Published in Business News

SAN DIEGO -- After a 10-year investigation, Europe's anti-monopoly regulator fined Qualcomm $271 million on Thursday for predatory pricing on the sales of smartphone chips between 2009 and 2011 to hurt rival Icera.

Qualcomm said it would appeal the European Commission finding to the General Court of the European Union. The San Diego wireless technology firm will provide a financial guarantee in lieu of paying the fine pending appeal.

This is the second anti-trust penalty that the European Commission has levied against Qualcomm in the past two years. In January 2018, the commission fined the San Diego company $1.2 billion for exclusive supply agreements with Apple.

Qualcomm has appealed the Apple fine as well, which is pending.

The European Commission found that Qualcomm sold certain 3G modem chipsets to Chinese smartphone makers Huawei and ZTE below cost, with the aim of forcing Icera out of the market.

The commission called Huawei and ZTE strategically important customers and said Qualcomm made the move when Icera was becoming a viable rival of 3G chips, thus posing a threat to Qualcomm's chip business.

 

"Qualcomm's strategic behavior prevented competition and innovation in this market, and limited the choice available to consumers in a sector with a huge demand and potential for innovative technologies," said Commissioner Margrethe Vestager in a statement.

Qualcomm contends that it did not violate anti-competition laws and did not harm Icera, which brought the complaint.

Icera was acquired by Nvidia for $367 million in 2011 and under Nvidia continued to produce cellular chips until 2015.

"The Commission spent years investigating sales to two customers, each of whom said that they favored Qualcomm chips not because of price but because rival chipsets were technologically inferior," said Don Rosenberg, general counsel for Qualcomm. "Icera was later acquired by Nvidia for hundreds of millions of dollars and continued to compete in the relevant market for several years after the end of the alleged conduct."

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