Not so happy holidays for Qualcomm — chipmaker fined $854 million in S. Korea

By Lulu Chang December 28, 2016

qualcomm — Karlis Dambrans/Flickr

Google is not the only tech giant accused of violating antitrust laws. Now, chipmaker Qualcomm is in hot water, too — boiling water, really. The American company has been fined a whopping $854 million for allegedly breaking competition laws in South Korea. According to the Korean Fair Trade Association (KFTC), Qualcomm took part in unfair business practices with respect to its patent licensing and modem chip sales, and also “abused its dominant position in the chip market,” the BBC reported.

Following the announcement of the rather surprising ruling, Qualcomm insisted it would contest the decision. Calling the action “unprecedented,” the chipmaker said that it had followed the South Korean rules and regulations that have been in place for the last few decades.

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“Qualcomm strongly believes that the Korea Fair Trade Commission findings are inconsistent with the facts, disregard the economic realities of the marketplace, and misapply fundamental tenets of competition law,” said Don Rosenberg, the company’s general counsel, in a statement.

The decision follows a lengthy 20-month investigation by the KFTC, which ultimately determined that Qualcomm impeded rival access to important wireless technology patents, affecting these companies’ sales. The association also accuses Qualcomm of forcing mobile phone manufacturers into unfair agreements, requiring them to buy comprehensive wireless technology licenses regardless of whether or not they were necessary.

Said KFTC secretary-general Shin Young-son, “We investigated and decided on these actions because Qualcomm’s actions limit overall competition.”

For years, Qualcomm has supplied smartphone chips to South Korean companies like Samsung and LG, pointed out Rosenberg. “For decades, Qualcomm has worked hand-in-hand with Korean companies to foster the growth of the wireless Internet. Qualcomm’s technology and its business model have helped those companies grow into global leaders in the wireless industry. This decision ignores that win-win relationship.”

But it’s not just in South Korea that Qualcomm may be in trouble. Investigations are underway in both the U.S. and Taiwan as well, and we’ll keep you updated on any developments.

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