The EC says Qualcomm paid billions of dollars to Apple not to buy LTE chips from rivals; Qualcomm says it will appeal. The European Commission (EC) has fined Qualcomm €997m ($1.23bn) for abusing its dominance in LTE baseband chipsets market. The EC said that Qualcomm had prevented rivals from competing in the market by making significant payments to Apple on the condition that it would not buy from rivals, which is illegal under EU antitrust rules. Qualcomm said it “strongly disagrees” with the decision and will appeal.
Margrethe Vestager, the Commissioner in charge of competition policy, said: “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. 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.”
Vestager said this meant that no rival could challenge Qualcomm in the market: “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.”
Baseband chipsets allow smartphones and tablets to connect to cellular networks, and Qualcomm is by far the world’s largest supplier. But Intel, in particular, has tried to challenge and compete with Qualcomm for customers.
Apple’s iPhones and iPads make it a key customer for LTE baseband chipsets, and the EC said that in 2011 Qualcomm signed an agreement with Apple committing it to make significant payments to Apple on the condition that the company would exclusively use Qualcomm chipsets in its iPhones and iPads. In 2013, the term of the agreement was extended to the end of 2016.