By Lee Min-hyung
The nation’s antitrust watchdog has fined Qualcomm a record 1.03 trillion won ($853 million) for abusing its monopolistic power to sign unfair licensing contracts with smartphone makers here.
The Fair Trade Commission (FTC) said Wednesday that the U.S.-based chipmaker forced local smartphone manufacturers — Samsung Electronics, LG Electronics and Pantech — to agree to unjust licensing terms and conditions.
The fine is the largest ever levied by the FTC, which can impose penalties of up to 3 percent of a company’s sales, depending on the seriousness of the issue.
To calculate the fine, the regulator conducted an investigation into the chipmaker’s business operations here over the past seven years.
“Qualcomm had 38 trillion won in sales here from December 2009, and so we decided to impose a 2.7 percent fine on this,” said FTC Secretary-General Shin Young-seon. “We viewed Qualcomm’s abuse of power as a serious breach of the law.”
The regulator pointed out that Qualcomm demanded handset manufacturers grant the chipmaker royalties-free licenses when using their patents.
In response, Qualcomm said it could not accept the decision and would file a lawsuit over the amount of the fine and the method used to calculate it.
“Qualcomm’s repeated requests during the FTC’s investigation for basic due process rights such as access to the case file and the right to cross examine witnesses were denied,” Don Rosenberg, executive vice president and general counsel at Qualcomm, said in a statement.
“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,” he added.
According to the FTC, Qualcomm has to pay the fine within 60 days of the watchdog’s issuance of a written order.
The regulator said it would take 20 to 30 days to issue the order.
The FTC also made it clear that the decision has nothing to do with protectionist moves against U.S. firms.
“Some may raise concerns that we are executing the law to protect local firms, but this is not the case,” said Shin. “Handset companies here and abroad have been affected by Qualcomm’s anti-competitive practices.”
Affected firms — also including Apple and Huawei — told the FTC that Qualcomm’s business model hampered fair competition, according to the regulator.
This is not the first time Qualcomm has faced fines from regulators in its global market. In February last year, the firm settled with Chinese antitrust regulators by paying a $975 million fine for breaching the country’s anti-monopoly law.