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South Korea Accuses Qualcomm of Unfair Business Practices

The Korea Fair Trade Commission has issued a formal protest against Qualcomm related to its business practices, the San Diego chipmaker acknowledged after markets closed on March 10.

The news clipped Qualcomm shares by 1 percent in after-hours trading to $34.98.

The allegations spelled out in a case examiner’s report, which is confidential, appear to follow a nearly three-year investigation by a South Korean antitrust task force. That task force was prompted by complaints from South Korea’s Nextreaming and Thin Multimedia, which make software for cell phone users to download music, surf the Internet and watch video. They accused Qualcomm of undermining fair competition by bundling its multimedia software into its market-dominant cell phones. Other complaints surround discounts and rebates by Qualcomm to customers.

The case examiner’s report apparently does not say what specific remedies may be sought against the San Diego chipmaker, the company said.

“Qualcomm believes its actions have been lawful and over the next several months plans to submit its response to the allegations,” the company said in a March 10 statement.

South Korea is home to several mobile phone makers such as LG, Samsung and Pantech as well as smaller companies that provide technology and components.

Qualcomm routinely faces complaints by rivals in Japan, Europe and U.S. markets that it abuses its dominance to demand excessive royalties and block fair competition.

Last October, the company settled a bitter dispute with Nokia, in which the Finnish phone maker agreed to pay out $2.5 billion in upfront royalties and $1.8 billion in intangible assets. The two companies have since partnered on a new smart phone model that will be powered by Qualcomm chips.

Qualcomm is still mired in lawsuits against another rival, Broadcom.

At the annual shareholder meeting last week, CEO and Chairman Paul Jacobs characterized the lawsuits as efforts by rivals to recover in the courtroom what they had lost in the marketplace. He said the company wasn’t interested in legal battles but would stand its ground when challenged.

“We’re constantly talking to adversaries not just in litigation but in ways where we can avoid litigation in the future,” he said. “When the opportunity to make peace is beneficial it is absolutely our preference. It doesn’t stand the industry well to be involved in litigation.”

Qualcomm’s market share grew to 40.6 percent last quarter, up from 36.3 percent in the third quarter, according to market research firm iSuppli Corp. A distant number two supplier is Texas Instruments Inc. which had 20.9 percent.

, Ned Randolph

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