The European Commission has fined chipset manufacturer Qualcomm €997m for infringing anti-trust laws and abusing its dominant market position.
In a press release on Wednesday afternoon, the Commission said the fine had been imposed after it emerged Qualcomm had made an agreement with Apple where they would pay substantial sums of money to the tech-giant so they wouldn’t deal with rival companies.
Under the terms of the agreement, if Apple changed suppliers then payments would stop and they would have to return any payments already made.
Baseband chipsets enable mobile devices – like iPhones and iPads – to connect to cellular networks, facilitating the transmission of voice and data.
Although Qualcomm enjoyed a dominant market position, Intel, which specialises in developing chipsets for use in desktop computers, had attempted to get into the market. According to internal documents seen by the European Commission, a switch to Intel chipsets was under serious consideration by Apple but that their agreement with Qualcomm inhibited talks from progressing further.
Head of Competitions policy, Margrethe Vestager, 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 US Dollars to a key customer, Apple, so that it would not buy from rivals.”
“Qualcomm’s behaviour denied consumers and other companies more choice and innovation – and this in a sector with a huge demand and potential for innovative technologies.”
Under EU antitrust laws, dominant companies have extra responsibilities not to abuse their privileged market position. The full fine Qualcomm will have to pay is €997,439,000, which represents 4.9% of Qualcomm’s turnover in 2017.
The agreement, which was originally signed in 2011, would run until 2013. This was then extended until September 2016. With the approaching deadline, Apple had started to source chipsets from Intel.
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