Qualcomm has been fined €997 million by the European Commission over claims that it abused its dominance of the LTE baseband chipset market in a bid to shut out rivals.
According to the Commission, the company paid Apple to buy the devices exclusively from Qualcomm, thereby preventing rivals from muscling in on Qualcomm's patch.
By locking up the single biggest and most profitable buyer of the devices, rivals were prevented from gaining critical mass, while Apple got itself an uncommonly good deal.
The European Commission claims that such practices contravened European Union competition law and prevented rivals from offering better and/or more innovative alternatives.
"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," said European Commission's commissioner in charge of competition, Margrethe Vestager.
She continued: "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.
"This meant that no rival could effectively challenge Qualcomm in this market, no matter how good their products were. 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. This is illegal under EU antitrust rules and why we have taken today's decision."
Qualcomm, naturally, pledged to appeal the decision. "Qualcomm strongly disagrees with the decision and will immediately appeal it to the General Court of the European Union," the company asserted in a statement this afternoon.
"We are confident this agreement did not violate EU competition rules or adversely affect market competition or European consumers," said Don Rosenberg, executive vice president and general counsel of Qualcomm. "We have a strong case for judicial review and we will immediately commence that process."
The Commission's decision is rendered somewhat hollow by the European Commission's recent decision to waive through Qualcomm's $47 billion acquisition of rival NXP Semiconductors in a deal that critics say will reduce choice and increase prices.
That acquisition has also been slammed by NXP investor Elliott Management, for undervaluing the company. In other words, Elliott wants even more of Qualcomm's money in order to vote in favour of the deal. It noted that half of NXP's revenue is derived from high-growth markets. Critics of the deal suggest that Qualcomm will boost margins by selling or closing the less-high-growth bits of NXP.
Qualcomm is, at the same, fighting a hostile $133 billion takeover by Broadcom, arguing that it "raises significant regulatory and national security risks".
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