The South Korea Fair Trade Commission, the nation’s antitrust authority, has issues a ruling that chipmaker Qualcomm abused its dominant position in the CDMA chip market by imposing higher royalties on companies that used components from rival companies. The Korean FTC imposed a fine of $208 million on Qualcomm—which could be a stinging blow, considering that South Korea’s LG and Samsung are among Qualcomm’s top customers.
Qualcomm controls the vast majority of the CDMA chipset market; a 2008 estimate put their market share over 99 percent.
The Korea FTC investigation has been underway for more than three years. The agency says Qualcomm leveraged customers into using its own chipsets by offering rebates for using its own chips—a tactic similar to that used to squeeze AMD in the computer processor market. Qualcomm has dominated the CDMA market in Korea for over a decade; industry estimates place Qualcomm’s revenues from the Korean market at around $2 billion a year. The $208 million fine represents the largest penalty the commission has ever assessed.
Qualcomm, for its part, denies any wrongdoing and says rebates and other incentive programs were part of marketing efforts and agreements with Korean customer. Qualcomm plans to appeal the decision to Korean courts. Like Intel’s recently announced appeal of the European Commission’s antitrust ruling, Qualcomm contents the Korean FTC ignored or downplayed evidence that Qualcomm’s practices have been lawful and even beneficial to the South Korean wireless industry.
The Korean FTC dismissed antitrust claims related to integrating multimedia capabilities into its chipsets.
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