Qualcomm’s business model under legal scrutiny from regulators across the globe.
In a significant development, South Korea’s antitrust regulator have fined Qualcomm $854 million for unfair business practices related to its patent licensing and modem chip sales.
This is the largest ever fine levied by South Korea.
Qualcomm has stated it will challenge the fine in court.
According to the Korea Fair Trade Commission (KFTC), Qualcomm has abused its dominant market position and has forced phone manufacturers to pay royalties for a broad set of patents, which are unnecessary, as part of its modem chips.
Furthermore, the KFTC has stated that Qualcomm has also hindered competition by refusing / limiting the licensing of its standard essential patents for modem chips to rival chip manufactures, including MediaTek Inc, Intel Corp and Samsung Electronics Co Ltd and thereby limit competition.
On its part, Qualcomm has stated it will file for an immediate stay of the order and will appeal the decision taken by Seoul’s High Court.
Qualcomm will also file an appeal on the quantum of the fine and the method used to calculate it.
“Qualcomm strongly disagrees with the KFTC’s announced decision,” said a spokesperson from Qualcomm.
This development is the latest in a series of antitrust investigations and rulings Qualcomm faced by regulators across the globe. In February 2017, Qualcomm paid a fine of $975 million following a 14-month investigation by Chinese regulators; in December 2015, the EU had accused Qualcomm of abusing its market position to thwart rivals.
In its order, Seoul’s High Court ordered Qualcomm to correct its business practices by negotiating patent licensing agreements with its rivals in good faith and without unfair restrictions which hinders the scope of the sale of chips by potential customers.
KFTC also ordered Qualcomm to end, what it termed as unnecessary, broad patent licensing requirements that handset manufacturers have to adhere to in the sale of modem chips.
KFTC wants these contracts to be renegotiated.
“This case fundamentally corrects a business model that allowed Qualcomm to maintain and extend its dominance,” said the KFTC in a statement.
Regulators in the United States and Taiwan are also investigating Qualcomm’s business practices.