The European Commission fined Qualcomm Inc. $272 million (242 million euros) after it found the San Diego-based chipmaker had engaged in predatory pricing. The fine was the result of a 10-year investigation that found Qualcomm sold its 3G chipsets below cost between 2009 and 2011, undercutting competing semiconductor company Icera, which later sold to NVIDIA.
At the time, Qualcomm had a 60 percent share in the market for UMTS (Universal Mobile Telecommunications Service) baseband chipsets, which are critical to allowing phones to connect to a network. According to the European Commission, Qualcomm specifically reduced prices for two “strategically important” customers, Chinese telecommunications companies Huawei and ZTE.
“Qualcomm sold these products at a price below cost to key customers with the intention of eliminating a competitor,” European Commissioner for Competition Margrethe Vestager said in a news release. “Qualcomm’s strategic behaviour 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.”
Qualcomm plans to appeal the ruling to the General Court of the European Union, the company announced in a July 18 news release. In lieu of paying to $272 million fine, the company would provide a financial guarantee while the appeal is pending.
“The Commission’s decision is based on a novel theory of alleged below-cost pricing over a very short time period and for a very small volume of chips,” Qualcomm General Counsel Don Rosenberg said in a news release, calling the Commission’s decision “meritless.”
Rosenberg added that Qualcomm’s actions had not caused anticompetitive harm to Icera, and that customers favored Qualcomm’s chips not because of price, but because rival chipsets were “technologically inferior.”
“This decision is unsupported by the law, economic principles or market facts, and we look forward to a reversal on appeal,” he stated.