US chipmaker Qualcomm has been fined EUR242 million by the European Commission for “engaging in predatory pricing”.
The European Commission says Qualcomm had been abusing its market dominance in 3G baseband chipsets, selling sold below cost, with the aim of forcing its competitor Icera out of the market.
The commission says this is illegal under EU antitrust rules.
It concluded that Qualcomm engaged in predatory pricing during the period investigated is based on: a price-cost test for the three Qualcomm chipsets concerned and a broad range of qualitative evidence demonstrating the anti-competitive rationale behind Qualcomm's conduct intended to prevent Icera from expanding and building market presence.
Commissioner Margrethe Vestager, in charge of competition policy, says: “Baseband chipsets are key components so mobile devices can connect to the Internet.
“Qualcomm sold these products at a price below cost to key customers with the intention of eliminating a competitor. Qualcomm’s strategic behaviour prevented competition and innovation in this market, and limited the choice available to consumers in a sector with a huge demand and potential for innovative technologies. Since this is illegal under EU antitrust rules, we have today fined Qualcomm EUR242 million."
Baseband chipsets enable smartphones and tablets to connect to cellular networks and are used both for voice and data transmission.
This case concerns chipsets complying with the Universal Mobile Telecommunications System (UMTS), the third generation (3G) standard.
The EU says today's decision concludes that Qualcomm held a dominant position in the global market for UMTS baseband chipset between 2009 and 2011.
It explains that this is based in particular on Qualcomm's high market shares of approximately 60% (almost three times the market share of its biggest competitor) and the high barriers to entry to this market, it adds.
These include the significant initial investments in research and development to design UMTS chipsets and various barriers related to Qualcomm's intellectual property rights.
On this basis, the commission concluded that Qualcomm's conduct had a significant detrimental impact on competition.
It prevented Icera from competing in the market, stifled innovation and ultimately reduced choice for consumers, the commission notes.
In May 2011, Icera was acquired by US tech company Nvidia, which decided to wind down its baseband chipset business line in 2015.
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