European Commission has fined Qualcomm for abusing its market dominance by predatory pricing. Commission investigated the claims that Qualcomm’s pricing behavior during 2009-2011 was predatory and forced Icera out of market.
Baseband chipsets are key components for mobile devices to connect internet. Qualcomm held a dominant position in this market with high market shares that is almost three times of its closest competitor between 2009-2011. Chipset market had high market entry barriers such as intellectual property rights and high initial investment costs.
Commission found and elaborated that;
Qualcomm priced chipsets below cost between 2009-2011 to Huawei and ZTE, two strategically important customers,
Qualcomm aimed to eliminate Icera from the market,
Qualcomm’s below-cost pricing had negative impact on Icera’s business,
Qualcomm’s below-cost pricing did not provide any efficiencies,
Qualcomm’s conducts had a significant detrimental anti-competitive impact on competition of baseband chipset market,
Qualcomm’s behavior had a significant detrimental impact on innovation in chipset market,
Qualcomm’s behavior reduced consumer choice.
Based on this perspectives, Commission fined Qualcomm € 242.042.000 amounting to 1.27% of firms’ turnover in 2018. In determining the amount of the fine, Commission considered the duration and gravity of the infringement.
Indeed, this is not the first case Qualcomm is fined by Commission for antitrust infringement. Commission fined Qualcomm 997 m Euro in January 2018, for abusing its market dominance in LTE baseband chipsets by preventing competition on merits. Qualcomm was specifically fined for the signing agreement with Apple and committing to make significant payments to Apple on the condition that the company would exclusively use Qualcomm chipsets in its "iPhone" and "iPad" devices. The agreement was extended until the end of 2016. Therefore, Apple was facing with significant switching costs if it decided to supply from Intel, the main rival. Towards the end of 2016 however, Apple started to switch to Intel, as switching costs lessened. It was clear that Qualcomm’s practices by means of the agreement, prevented rivals to enter the market for long years.
Concurrently, Broadcom’s proposed acquisition of Qualcomm early in 2018, was blocked politically by US government, before any formal antitrust review.
In June 2018, very recently, European Commission has opened another investigation in chipset market against another market player, Broadcom, for similar antitrust concerns. The investigation was opened to evaluate whether Broadcom was restricting competition through exclusivity practices with regards to TV and modem chipsets markets. The investigation is expected to assess;
Exclusive purchasing obligations,
Rebates or other advantages conditioned on exclusivity or minimum purchase requirements,
Bundling,
Interoperability problems against rival products,
Abusive intellectual property strategies.
Commission imposed interim measures against these practices to prevent irreparable damages until the final decision.
To conclude, chipset market is recently under close antitrust scrutiny.
(Decision: AT.40608)
If there is need of any other information about the article, please contact the below stated person.
|
NAZALI ANTITRUST |