Qualcomm In Critical Legal Battle Against The U.S. Antitrust Body

The antitrust case against Qualcomm brought by the U.S. Federal Trade Commission’s antitrust case accusing Qualcomm Inc of abusing a monopoly on mobile chip technology is expected to head to the courtroom on Friday for a trial whose outcome could have a major impact on the smartphone industry.

It could be forced upon Qualcomm to change its practices for licensing for a number of its patents to manufacturers such as iPhone maker Apple Inc of the government is able to prevail in the non-jury trial before U.S. District Judge Lucy Koh, in San Jose, California.

The FTC case would be closely watched by Apple because that iPhone maker has its won pending cases similar in nature against Qualcomm.

Canaccord Genuity analyst T. Michael Walkley said in a research note that the issue of negotiations of a settlement between Apple and Qualcomm would be significantly impacted by the outcome of the case.

Even though Qualcomm id one of the largest manufacturers of smartphone chips, a major portion of the revenues and profits of the company are derived from licensing patents to other companies by it.

According to the allegations against Qualcomm made by FTC’s 2017 lawsuit include anticompetitive clause of “no license, no chips” by the San Diego-based for its licensing of its patents business according to which the company only supplies chips and processors to only those phone manufacturing companies that agree to the patent licensing terms of the chip maker which are often alleged to be exorbitant.

According to the allegations of the agency, competition from Intel Corp was neutralised by Qualcomm with respect to Apple Inc as the iPhone maker was forced to accept an anticompetitive deal under which Apple was given financial rebates if the company agreed to purchase chips from Qualcomm only.

Qualcomm on its part has claimed that its market dominance was because of technical leadership and the rates of its patent licensing were reasonable considering the path breaking research and development outcomes conducted by it.

Qualcomm said in a Dec. 31 court filing that the FTC “seeks to enjoin legitimate, procompetitive business practices that facilitated the growth of a phenomenally successful industry that bears all the hallmarks of healthy and vigorous competition.”

Regulators in South Korea, China, Taiwan, and Europe have also investigated the business practices of Qualcomm. Qualcomm has accused Apple of driving those regulatory actions.

In January 2018, a fine of 997 million euro ($1.14 billion) was imposed on Qualcomm by the European antitrust officials on charges of the chip maker making billions of dollars in unlawful payments to bind Apple to a clause that would not allow the iPhone maker to purchase from Qualcomm rivals. Qualcomm has appealed the determination.

The conflict between Apple and Qualcomm has assumed global proportions as such cases are being fought out in multiple countries. Following the filing of the antitrust case by Apple against Qualcomm, the chip maker reciprocated by accusing that Apple had made use of its patented technology without authorization from Qualcomm.

(Adapted from Reuters.com)

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Categories: Economy & Finance, Regulations & Legal, Strategy, Sustainability, Uncategorized

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