Qualcomm appeals antitrust fine

Qualcomm, a San Diego-based developer of smartphone chips, is said to have filed an appeal in the Seoul High Court against a 1 trillion won ($875 million) fine levied by Korea’s antitrust agency in December.

The company’s deadline to file an appeal was Wednesday. In it, Qualcomm is said to have questioned the Korean Fair Trade Commission’s neutrality by raising suspicion of close ties with Korea’s largest conglomerate, and a developer of semiconductors, Samsung.

Both Samsung and the FTC are under investigation by Korean special prosecutors in connection with the corruption scandal involving President Park Geun-hye and her confidante Choi Soon-sil, who allegedly extorted money from companies in exchange for political favors.

“A month ago in our statement, we have mentioned that we will appeal the FTC decision to the Seoul High Court according to the legal procedures,” a Qualcomm Korea official said Wednesday. “Under Korean regulations, companies can make an appeal of the FTC’s decision within 30 days, which is today.”

In December, the FTC issued a 1 trillion won fine, its heaviest ever, against Qualcomm after reviewing the case for nearly two years. It’s the only case where Qualcomm has been fined for antitrust practices. The FTC accused the company of limiting competition by denying or limiting patent licenses of modem chips to other developers and forcing unfair contracts on smartphone manufacturers by using its dominant market position.

Qualcomm leads the world’s smartphone application processor market with a 39 percent market share as of the first half of 2016, according to research firm Strategy Analytics.

After the FTC’s decision in December, the company immediately released a statement protesting it and vowing to bring the issue to court.

“Qualcomm’s repeated requests during the FTC’s investigation for basic due process rights such as access to the case files and the right to cross-examine witnesses were denied,” Don Rosenberg, Qualcomm’s executive vice president and general counsel, said in a statement in December. “These rights and others are supposed to be guaranteed to U.S. companies under the Korea-U.S. Free Trade Agreement, yet the FTC declined to implement these fundamental procedural safeguards.”

Prior to the FTC’s final judgment, Qualcomm requested the agency disclose statements made by witnesses, especially officials from one of its key clients, Samsung.

Recently, Qualcomm has stepped up its offense against the FTC.

In an interview with Bloomberg on Tuesday, Rosenberg raised suspicion of Samsung’s influence on the FTC.

“The incorrect decision is the product of an unfair process that we believe was heavily influenced by commercial interest,” he said. “The recent reports about the special prosecutors’ investigation into Samsung’s connection to the former vice chairman of the FTC, who oversaw our case, has increased our level of concern.”

Samsung’s de facto chief, Lee Jae-yong, was arrested last week on bribery charges, a first for the 72-year-old family-run conglomerate. Lee is accused of bribing Choi Soon-sil in exchange for favorable treatment from top government institutions including the National Pension Fund, the Financial Services Commission and the Fair Trade Commission.

The FTC said the ongoing investigation has nothing to do with its decision on Qualcomm.

BY LEE HO-JEONG [lee.hojeong@joongang.co.kr]