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Qualcomm slapped with $1.2 billion fine by EU for Apple deal

Qualcomm allegedly paid Apple to become the exclusive chip supplier for iPhones between 2011 and 2016.

  • Updated: January 24, 2018 4:36 PM IST
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Update: The European Commission has slapped Qualcomm a fine of $1.2 billion for violation of antitrust laws in a series of deals with Apple. “This meant that no rival could effectively challenge Qualcomm in this market, no matter how good their products were,” said EU competition commissioner Margrethe Vestager in a press statement, adding, “This is illegal under EU antitrust rules and why we have taken today’s decision,” reports The Verge.

The European Commission is reportedly set to slap Qualcomm with a heavy fine of up to $2 billion (approximately Rs 200 crore) for anti-competitive practices. The chipmaker allegedly paid Apple for the exclusive use of its chipsets in the iPhones between 2011 and 2016.

It is not the first time that Qualcomm and Apple have been embroiled in legal battles. However, the latest chips deal case is likely to impact all other cases running between the two tech majors. The industry watchdog is likely to issue a ruling against Qualcomm for having disrupted fair trade practice and discouraging other chip makers from collaborating with Apple.

Qualcomm’s exclusivity in chip supply for iPhones prevented other chip makers from offering similar components that could have been used by Apple. In 2016, Apple started using Intel’s chips for the iPhone 7 and iPhone 7 Plus. Although the iPhone 7 models with Intel chipsets were found to be slower in LTE speeds as compared to Qualcomm models, some reports indicated that Apple planned to completely move away from Qualcomm for the future iPhones.

As Apple Insider points out, fines are capped at a maximum of 10 percent of annual turnover under EU rules. In Qualcomm’s case, this translates to somewhere around $2 billion, and the European Commission is allegedly aiming to issue the maximum allowable penalty to punish Qualcomm and deter it from future offenses.

In addition to the chips deal, the European Commission is also looking into another activity by the chipmaker between 2009 and 2011 when Qualcomm allegedly produced a chipset to two of its customers at below cost. The move is said to be targeted at forcing rival Icera out of the market.

If the latest ruling goes against Qualcomm and the purported fine is levied then it will have implications on other cases between the iPhone maker and the chipmaker. Qualcomm has a $1 billion lawsuit from Apple claiming unpaid rebates withheld over the company’s participation in an antitrust investigation. Qualcomm, in turn, filed a lawsuit against Apple for breach of contract. The countersuit demands a ban on iPhone and iPad imports. Separate lawsuits in Germany and China concern patent infringement.

Meanwhile, Qualcomm is already facing a fine of $773 million by Taiwan’s Fair Trade Commission for having engaged in anti-trust and monopolistic practices. As a result of these lawsuits and fines, and Apple withholding royalty payments, Qualcomm claims its revenue is being impacted. For Q4 last year, the company repored net income drop from $1.6 billion to just $168 million year-on-year.

  • Published Date: January 24, 2018 11:13 AM IST
  • Updated Date: January 24, 2018 4:36 PM IST