Qualcomm has been fined a record 1.03 trillion won ($853 million) by South Korea's Fair Trade Commission (KFTC) over antitrust violations. The regulator said that Qualcomm's "unnecessarily broad patent licensing requirements" resulted in phone makers paying more royalties than required for its modem chips.
Qualcomm was also found to be in violation of competition law as it limited access to its standard essential patents to competing chip makers. In addition to the fine, the KFTC said that it will issue a corrective order specifying the business practices it took an issue with.
Calling the move "unprecedented and insupportable," Qualcomm said that it would file for an "immediate stay of the corrective order and appeal the KFTC's decision to the Seoul High Court." The company said that it will also appeal the amount of the fine and the method the KFTC used to calculate it.
Qualcomm's executive vice president and general counsel Don Rosenberg talked about the inherent value of Qualcomm's patents, and said that the current business practices are an industry norm:
The regulator's decision doesn't go into effect until it issues a written order, which according to Qualcomm could take anywhere from four to six months. Should the decision be upheld, it could lead to Qualcomm changing its lucrative business model in the country.
Qualcomm earned more than $26 billion in revenue last year, of which 30% came from licensing its patents. The chip maker collects royalties based on the price of a handset, and with 11% of its sales coming from Samsung, the ruling could limit Qualcomm's earnings from South Korean manufacturers.
Qualcomm had to pay a $975 million fine in China last year after a 14-month investigation by the country's antitrust regulator. The company also agreed to lower its royalty rates for Chinese manufacturers.
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Harish Jonnalagadda is a Senior Editor overseeing Asia at Android Central. He leads the site's coverage of Chinese phone brands, contributing to reviews, features, and buying guides. He also writes about storage servers, audio products, and the semiconductor industry. Contact him on Twitter at @chunkynerd.