EU: Qualcomm fined €242M for engaging in predatory pricing

According to the Wall Street Journal, the European Commission fined Qualcomm €242 million on Thursday, July 18, for abusing its market dominance in 3G baseband chipsets, the second penalty from the bloc in 18 months and its latest move targeting top US tech companies for breaching antitrust rules. Qualcomm sold below cost, with the aim of forcing its competitor Icera out of the market. This is illegal under EU antitrust rules.

Commissioner Margrethe Vestager, in charge of competition policy, said, “Baseband chipsets are key components so mobile devices can connect to the Internet. Qualcomm sold these products at a price below cost to key customers with the intention of eliminating a competitor. Qualcomm’s strategic behaviour prevented competition and innovation in this market, and limited the choice available to consumers in a sector with a huge demand and potential for innovative technologies. Since this is illegal under EU antitrust rules, we have today fined Qualcomm €242 million.”

The EU started a formal probe of the case in 2015 after a competitor to Qualcomm, British phone chip maker Icera, alleged that between 2009 and 2011 the US company engaged in “predatory pricing,” selling certain chips at a price below the market to drive Icera out of business. Icera has since been bought by Nvidia, which later withdrew from the baseband chips market.

The EC  investigation found that Qualcomm abused this dominance between mid-2009 and mid-2011 by engaging in predatory pricing. Qualcomm sold certain quantities of three of its UMTS chipsets below cost to Huawei and ZTE, two strategically important customers, with the intention of eliminating Icera, its main rival at the time in the market segment offering advanced data rate performance.