Qualcomm staring at a potential multi-million euro fine in anti-trust case

The imposition of a fine by anti-trust regulators in the EU could potentially provide an opportunity for a hostile takeover of Qualcomm.

As per a source familiar with the matter at hand, EU’s anti-trust regulators are set to impose a multi-million euro fine on Qualcomm Inc on Wednesday for paying Apple Inc to only use the chips that it makes.

In 2015, the European Commission has accused Qualcomm of anti-competitive behavior and had stated that it could impose a fine as high as 10% of its annual revenue.

Qualcomm made $22.2 billion in its most recent fiscal year.

Qualcomm and Apple are engaged in a wide-ranging legal battle over Qualcomm’s business practices with Apple suing Qualcomm, a year ago, for around $1 billion in patent royalty rebates that the chipmaker allegedly withheld from the phone maker.

The U.S. Federal Trade Commission (FTC) is also investigating Qualcomm’s business dealings with Apple and the imposition of a fine by EU’s anti-trust regulators is likely to make Qualcomm more vulnerable to hostile bids.

Broadcom has stated it will smooth its rocky relations with customers, including Apple.

EU’s antitrust regulators are pursuing two proceedings against Qualcomm, said the source, with the results of the second proceeding expected in coming months, said the source.

Apple has alleged that Qualcomm gave it a discount on royalty payments in exchange for exclusively using Qualcomm’s modem chips.

Qualcomm has countered saying Apple demanded the discount as an “incentive” to do business with it.

In a lawsuit filed in January 2017 by the U.S. FTC against Qualcomm, the regulator alleged that Qualcomm’s agreement was in fact a “de facto” exclusivity arrangement that violated antitrust rules.

Qualcomm has denied the FTC’s allegations.

The European Commission declined to comment.

Apple declined to comment beyond its previous position on Qualcomm’s practices.

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