What you need to know
- The European Commission is issuing a fine against Qualcomm for €242 million.
- Qualcomm's being accused of "predatory pricing" for its 3G baseband chips.
- The EU says Qualcomm's goal was to push competitors out of the market.
Qualcomm's found itself in some hot water. On July 17, the European Commission issued a press release announcing that it has fined the chip-maker a whopping €242 million. According to the EU, the fine comes as a result of Qualcomm under-cutting its competition with 3G baseband chips with the sole intent of pushing competitors out of the market.
Per EU Commissioner, Margrethe Vestager:
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
Between the years of 2009 and 2011, Qualcomm had a global market share of around 60% for 3G chips. Not only is that 60% a big number on its own, but it's also around three times the market share that was held by Qualcomm's biggest competitor at the time.
The EU's press release continues with:
Market dominance is, as such, not illegal under EU antitrust rules. However, dominant companies have a special responsibility not to abuse their powerful market position by restricting competition, either in the market where they are dominant or in separate markets.
While having a dominant position in a market isn't illegal, Qualcomm is reported to have been using "predatory pricing" during that 2009 and 2011 timeframe. Specifically, the EU notes that it sold chips to both Huawei and ZTE below cost to eat up more of the market and sell at prices its competitors couldn't afford.
The €242 million fine is not a small number, but compared to Qualcomm's 2018 turnover, only reflects 1.27% of it.