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Court upholds 1 trillion won fine on Qualcomm

Dec 05,2019
A court upheld a 1-trillion-won ($837-million) antitrust fine imposed on U.S. chip giant Qualcomm Wednesday for anticompetitive licensing practices.

The Seoul High Court, led by Judge Noh Tae-ak, rejected Qualcomm’s 2017 appeal of the record fine levied by the Fair Trade Commission (FTC), a blow to a company that faces legal battles and massive fines across the globe.

The San Diego-based chipmaker vowed to take the case to the Supreme Court.

“We disagree with the court’s decision to accept parts of the Korea Fair Trade Commission order and will immediately seek to appeal those provisions to the Korea Supreme Court,” the company said in a statement.

“But we are gratified that the court rejected the Korea Fair Trade Commission’s finding that our licensing terms are not fair, reasonable and nondiscriminatory and reversed the Korea Fair Trade Commission’s remedial order to renegotiate those licenses.”

The FTC fine was over Qualcomm’s licenses for its patents used by modem chipmakers and handset device makers, which it said violated fair, reasonable and nondiscriminatory terms, an industry-wide standard for licensing essential patents.

The antitrust agency said Qualcomm refused to license patents - essentially standard for the industry - to rival modem chipmakers, an allegation upheld by the court.

The chip giant was also found by the FTC to employ a so-called “no license, no chips” policy, which forced handset makers to sign a patent licensing contract in order to be able to get access to Qualcomm’s chips.

The court, however, disagreed with the FTC’s order that the telecom equipment provider renegotiate the license deals with cell phone makers, turning down the agency’s claim that Qualcomm forced unfair cross-licensing on them.

The rejection could dampen market prospects that the smartphone makers will renegotiate the current 3-5 percent royalties they pay from each handset they sell to Qualcomm.

Following the court decision, the antitrust watchdog will keep close tabs on Qualcomm to see whether it complies with corrective measures and fines approved by the court.

“The Fair Trade Commission will actively respond to the next trial at the Supreme Court after reviewing the verdicts,” a source at the FTC said.

“We will also thoroughly look into whether Qualcomm abides by the corrective measures based on the court decision,” she said.

In announcing the ruling and fine in 2016, the FTC said that it held a series of deliberations with handset markers who work with Qualcomm, including Samsung Electronics, LG Electronics, Sony, Huawei, Motorola, Lenovo, BlackBerry, Apple, Nokia and others.

Regulators in China, Taiwan and the European Union have levied fines against Qualcomm for using its monopoly status as the supplier of core smartphone chipsets.

The chipmaker agreed to pay a $975 million fine in China in 2015, also agreeing to modify the way it calculated licensing fees.

Taiwan’s regulator also fined Qualcomm $790 million in 2017.

Apple also sued Qualcomm over its royalty policies, though the two parties reached a settlement in April.

A high-profile ruling followed earlier this year in the United States in which Judge Lucy Koh of the Northern District of California found that Qualcomm’s licensing practices violated federal antitrust laws.

Still, a U.S. appeals court stayed the effects of the ruling in August.

BY PARK EUN-JEE [park.eunjee@joongang.co.kr]


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