The European Union (EU) has fined US smartphone chip supplier Qualcomm 997 million euros ($1.23 billion) for abusing its market dominance found illegal under EU antitrust rules, the European Commission said on Wednesday.
Qualcomm is the world’s largest supplier of long-term evolution (LTE) baseband chipsets, which enable smartphones and tablets to connect to cellular networks and are used both for voice and data transmission, Xinhua reported.
The Commission 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 dollars to a key customer, Apple, so that it would not buy from rivals,” Margrethe Vestager, the EU Commissioner in charge of competition policy, was quoted as saying.
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, Vestager 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. “This meant that no rival could effectively challenge Qualcomm in this market, no matter how good their products were. Qualcomm’s behavior denied consumers and other companies more choice and innovation and this is a sector with a huge demand and potential for innovative technologies. This is illegal under EU antitrust rules,” she added.