The U.S. Federal Trade Commission (FTC (News - Alert)) has filed a complaint against Qualcomm in the U.S. District Court in the Northern District of California for anti-competitive practices. For the details on the complaint, click here.
The FTC's complaint alleges that certain Qualcomm (News - Alert) business practices are in violation of U.S. competition law. In a recently released statement, Qualcomm asserts that it believes the complaint is based on a flawed legal theory, a lack of economic support and significant misconceptions about the mobile technology industry.
The statement from Qualcomm calls the FTC’s portrayal of facts “significantly flawed,” and in particular, that the company has never withheld or threatened to withhold chip supply in order to obtain agreement to unfair or unreasonable licensing terms, and that the FTC’s allegation to the contrary is wrong.
Dissenting FTC Commissioner Maureen Ohlhausen, who voted against the filing, said the complaint is “an enforcement action based on a flawed legal theory (including a standalone Section 5 count) that lacks economic and evidentiary support, that was brought on the eve of a new presidential administration, and that, by its mere issuance, will undermine U.S. intellectual property rights in Asia and worldwide.”
The three allegations of the FTC complaint accuse Qualcomm of working under a “no license, no chips” policy, providing baseband processors only to cell phone manufacturers that agree to its preferred license terms; that Qualcomm won’t license standard-essential patents to competitors; and that the company convinced Apple (News - Alert) to enter into an exclusive contract with it in exchange for reduced patent royalties.
Qualcomm disputes these allegations.
“This is an extremely disappointing decision to rush to file a complaint on the eve of Chairwoman Ramirez's departure and the transition to a new Administration, which reflects a sharp break from FTC practice,” said Don Rosenberg, EVP and GM, Qualcomm Incorporated. “In our recent discussions with the FTC, it became apparent that it still lacked basic information about the industry and was instead relying on inaccurate information and presumptions. In fact, Qualcomm was still receiving requests for information from the agency that would be necessary to an informed view of the facts when it became apparent that the FTC was driving to file a complaint before the transition to the new Administration. We have grave concerns about the two Commissioners' decision to bring this case despite a lack of evidence supporting the allegations and theories in the complaint. We look forward to defending our business in federal court, where we are confident we will prevail on the merits.”