EC launches dual inquiries into Qualcomm practices

by  

Barb Darrow

Regulators are looking into whether Qualcomm pressured customers to source all their chipsets from it or priced them below cost to drive out rivals.

The European Commission is looking into the business practices of Qualcomm  QCOM -0.09% , the world’s largest provider of the chips that power popular mobile devices.

The first line of inquiry is into whether the San Diego-based company breached European antitrust rules by parlaying its dominant position by pushing customers to source all or nearly all of their “baseband” chipsets from it. The second will look into whether it used predatory pricing to rid the market of competitors. That practice means the vendor offers prices below its own costs in order to drive rivals out of the market.

In a statement, EC Commissioner Margrethe Vestager said:

“We are launching these investigations because we want to be sure that high tech suppliers can compete on the merits of their products. Many customers use electronic devices such as a mobile phone or a tablet and we want to ensure that they ultimately get value for money. Effective competition is the best way to stimulate innovation.

In a statement posted to its website, Qualcomm said while it has not seen the complaint, it plans to defend against it.

“The reported allegations made to the European Commission are factually inaccurate and legally meritless. The accusation that Qualcomm has not lived up to its commitments to standard-setting organizations to license its essential patents on fair and reasonable terms is belied by the more than 130 licenses that Qualcomm has granted to a broad range of companies, among them five of the six reported claimants

The company could face fines of up to $2.5 billion or 10% of its global revenue, according to The wall Street Journal. San Diego-based Qualcomm is the market leader in “baseband” chipsets that handle the communication functions in smartphones and devices. these chips process both voice and data transmission.

EC regulators have been busy of late, launching probes into the business practices of Google, Amazon, Apple and Starbucks.

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