Thursday, 25 January 2018 05:55

Qualcomm fined for paying Apple to use its chips Featured

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EU commissioner Margrethe Vestager: "No rival could effectively challenge Qualcomm in this market." EU commissioner Margrethe Vestager: "No rival could effectively challenge Qualcomm in this market." Courtesy: European Union

The European Commission has fined chip maker Qualcomm €997 million (A$1.53 billion) for abusing its market dominance in LTE baseband chipsets.

The fine represents 4.9% of Qualcomm's turnover in 2017.

In a statement, the executive arm of the European Union said Qualcomm had prevented rivals from competing in the market by paying Apple on condition it would not buy from rivals.

EU Commissioner Margrethe Vestager, who is in charge of competition policy, said: "Qualcomm illegally shut out rivals from the market for LTE baseband chipsets for over five years, thereby cementing its market dominance.

"Qualcomm paid billions of US dollars to a key customer, Apple, so that it would not buy from rivals. These payments were not just reductions in price – they were made on the condition that Apple would exclusively use Qualcomm's baseband chipsets in all its iPhones and iPads.

"This meant that no rival could effectively challenge Qualcomm in this market, no matter how good their products were.

"Qualcomm's behaviour denied consumers and other companies more choice and innovation – and this in a sector with a huge demand and potential for innovative technologies. This is illegal under EU antitrust rules and why we have taken today's decision."

Qualcomm is the biggest supplier of LTE baseband chipsets. Others, like Intel, have tried to challenge the company for customers.

The EU statement said: "In 2011, Qualcomm signed an agreement with Apple, committing to make significant payments to Apple on condition that the company would exclusively use Qualcomm chipsets in its 'iPhone' and 'iPad' devices. In 2013, the term of the agreement was extended to the end of 2016.

"The agreement made clear that Qualcomm would cease these payments, if Apple commercially launched a device with a chipset supplied by a rival.

"Furthermore, for most of the time the agreement was in place, Apple would have had to return to Qualcomm a large part of the payments it had received in the past, if it decided to switch suppliers.

"This meant that Qualcomm's rivals were denied the possibility to compete effectively for Apple's significant business, no matter how good their products were.

"They were also denied business opportunities with other customers that could have followed from securing Apple as a customer."

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Sam Varghese

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Sam Varghese has been writing for iTWire since 2006, a year after the site came into existence. For nearly a decade thereafter, he wrote mostly about free and open source software, based on his own use of this genre of software. Since May 2016, he has been writing across many areas of technology. He has been a journalist for nearly 40 years in India (Indian Express and Deccan Herald), the UAE (Khaleej Times) and Australia (Daily Commercial News (now defunct) and The Age). His personal blog is titled Irregular Expression.

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