Not a great way to close out the year for Qualcomm, thanks to a recent ruling by South Korea’s antitrust regulation agency, the SK Fair Trade Commission, which has levied a huge $853 million (1.03 trillion SK won) fine on the company for what the Commission called unfair business practices.
The Commission said that the company has been too restrictive in the way it’s issued licenses for use of its key technological patents, especially on CDMA connectivity. Furthermore, it was alleged that Qualcomm tied patent licenses to orders for chips, which reportedly amounts to coercion.
The ruling, if it stands through the appeals process, about which Qualcomm has said it is optimistic, would force the company to let chipset-makers access its key patents, and stop marrying licensing to signed contracts. Appeal notwithstanding, the company will have to pay the fine within 60 days.
This is the second recent such ruling against Qualcomm, which in 2009 faced a 260 billion won fine for deterring competition through discriminatory charges. That case is still undergoing appeal with the Korean Supreme Court. Last year, China fined the company almost $1 billion.
A statement from Qualcomm refuted the decision, unsurprisingly. “This is an unprecedented and insupportable decision relating to licensing practices that have been in existence in Korea and worldwide for decades and that the KFTC reviewed but did not question in a previous investigation of Qualcomm,” the statement said.
The company went on to say that the decision:
• Lacks a coherent theory of competition law violations;
• Lacks any evidence of harm to competition;
• Results from a denial of procedural safeguards;
• Seeks to disrupt established licensing practices that have been accepted by the wireless industry and used by major patent holders for decades;
• Undermines incentives to invest in fundamental technology and share it with the industry;
• Imposes a fine that is insupportable and not reasonably related to the size of the Korean market.
“Qualcomm strongly believes that the KFTC findings are inconsistent with the facts, disregard the economic realities of the marketplace, and misapply fundamental tenets of competition law,” said Don Rosenberg, EVP and general counsel, Qualcomm Incorporated. “Importantly, this decision does not take issue with the value of Qualcomm's patent portfolio. Qualcomm's enormous R&D investments in fundamental mobile technologies and its broad-based licensing of those technologies to mobile phone suppliers and others have facilitated the explosive growth of the mobile communications industry in Korea and worldwide, brought immense benefits to consumers and fostered competition at all levels of the mobile ecosystem.”
Edited by
Alicia Young
