Commission fines Qualcomm €242 million over predatory pricing

Margrethe Vestager, Commissioner for Competition, during the press conference regarding the antitrust case against Qualcomm. [Jennifer Jacquemart/European Commission]

The EU’s antitrust authority has slapped chipmaker Qualcomm with a €242 million for applying predatory prices, Commissioner Margrethe Vestager announced on Thursday (18 July).

“EU competition rules do not prevent companies like Qualcomm from offering low prices for their customers,” Vestager explained during a press conference, “but they cannot sell below cost with the intention of eliminating a competitor. This is not a competition on the merits.”

According to the Commission assessment that is what Qualcomm did with baseband chipsets, present in smartphones and tablets enabling them to connect to mobile networks, between 2009 and 2011.

The Commission opened the case against the world’s leading chipmaker following a complaint from Icera. The Commission investigation found that as Icera chipsets became an attractive alternative, Qualcomm framed them as a “critical threat.”

“To make sure that Icera’s business could not reach a size that could endanger the market position of Qualcomm, Qualcomm took what it describes in internal documents as preventive actions,” Vestager explained.

In practice, the chipmaker company sold an important quantity of chipsets at below production cost to strategically important customers, namely Huawei and ZTE.

These customers “were essential for Icera to succeed in the market,” Commissioner said.

“The evidence we have seen shows that this was done on purpose to preventing Icera from gaining a foothold in the market at the time where Icera was Qualcomm’s main contender,” Vestager told reporters.

Icera soon abandoned the baseband chipset market.

However, asked about whether the fine was enough to dissuade other companies, the Commission admitted they had managed to prove the application of predatory prices but not that this was caused Icera to give up on the business.

Furthermore, the Commission considered that Qualcomm’s behaviour also affected innovation in the market, resulting in customers being deprived of a wider choice of technologies.

This is the first fine the EU antitrust has imposed for predatory prices in sixteen years.

The Commission decision also serves as evidence for any cases against Qualcomm for damages resulting from the company’s anti-competitive behaviour before national member states courts.

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Second antitrust fine against Qualcomm  

This is the second recent EU fine for Qualcomm, following a €997 million fine for abuse of market dominance in baseband chipsets in January 2018.

The Commission concluded that the firm abused its market dominance by preventing rivals from competing in the market between 2011 and 2016.

The EU’s competition authority argued Qualcomm made it even more difficult for its competitors to enter an already limited market by making targeted payments to Apple so that they would not buy from rivals between 2011 and 2016.

“In both that case and today’s, Qualcomm’s objective was the same, to protect its dominant position,” Vestager argued, “similarly the Commission’s objective in these cases is always the same, to protect European consumers and the benefits of competition, choice, affordable prices and innovation.”

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