Value context and insight. lkm@koreatimes.co.kr
W1 trillion fine against Qualcomm upheld in Supreme Court
Qualcomm headquarters in San Diego, California / Korea Times file
By Lee Kyung-min
By Lee Kyung-min
The Supreme Court upheld a combined 1 trillion won ($760 million) in fines imposed by the Korea Fair Trade Commission (FTC) on three entities of Qualcomm, Thursday, in broader recognition that the U.S. multinational firm abusing market dominance unfairly hampered the business activities of its weaker competitors.
The three are Qualcomm Incorporated and two of its modem chipset affiliates.
The Supreme Court recognized the antitrust agency's claim that the company, the exclusive holder of a standard essential patent (SEP), refused to share key intellectual property with manufacturers of modem chipsets and smartphones, including Intel and Samsung Electronics.
This in the FTC's view was an anti-competitive practice, which was grounds for imposing the record-high fine in 2016. SEPs are common in the highly standardized mobile and telecommunications industry, a sector defined by easy interoperability between mobile devices.
Further strengthening the FTC's case was Qualcomm's agreement to fulfill the obligation of fair, reasonable and non-discriminatory (FRAND) licensing when it obtained the SEP. If the patent is subject to a FRAND declaration, licenses to the SEP should be granted fairly on a non-discriminatory basis.
“Our findings reaffirmed and specified the standards on judging whether any market player asserting unreasonable business conditions to its competitors is in violation of FTC laws,” the top court said in its ruling.
Thursday's ruling concludes an eight-year legal battle between Korea's antitrust agency and the Qualcomm affiliates.
The FTC lauched an investigation in 2014 to look into suspicion that Qualcomm unilaterally set costly and unnecessary business terms and conditions, leaving its weaker market peers at a significant cost and quality disadvantage.
Among them were allegations that Qualcomm made Intel and Samsung buy claims to the patent rights, or refused to sign contracts.
Its patent-backed market dominance was fortified thereafter in the form of non-negotiable business terms and conditions imposed on smartphone manufacturers, according to the FTC.
The Seoul High Court, the lower court, said in 2019 that the FTC fine was “not excessive,” and found that eight of 10 corrective orders the antitrust agency recommended on Qualcomm were legitimate.
Qualcomm “laid out terms and conditions that were unreasonable and unacceptable in the broader context of normal business dealings,” the appellate court said at the time. “The practice led to unfair competition for its smaller market peers.”
The FTC issued a statement, highlighting the significance of Thursday's ruling.
“The ruling is significant because it reaffirmed the illegality of anti-competitive business structures sustained and fortified by a dominant market player for the sole purpose of expanding the status quo of a monopoly in the SEP market, despite the responsibilities under the FRAND obligations in the highly standardized modem chipset market,” it said.
Qualcomm's Korean office was unavailable for comment.