April 20, 2024

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[THE INVESTOR] South Korea’s antitrust watchdog on Dec. 28 slapped a record 1.03 trillion won (US$853.10 million) fine on US chip giant Qualcomm for abusing its dominant market position here.

The Fair Trade Commission said the San Diego-based company and its two affiliates breached the nation’s competition act by refusing to offer licenses to chipset manufacturers and demanding high fees for patents used by smartphone makers. 

The cited patents held by Qualcomm are categorized as standard essential patents that are required to be offered under non-discriminatory terms to any counterpart. But the firm offered the patents to selective chipset makers and smartphone makers that agreed to unfair contract conditions.

“The FTC orders Qualcomm to take corrective measures against its power abusing business and imposes 1.03 trillion won in fines,” the watchdog said in a statement. “The decision is aimed at putting right Qualcomm’s unfair business model.”

Qualcomm, however, immediately refuted the decision, calling it “unprecedented and unsupportable.”

“Qualcomm will file for an immediate stay of the corrective order and appeal the FTC’s decision to the Seoul High Court,” said Don Rosenberg, executive vice president and general counsel at Qualcomm.

“The decision lacks any evidence of harm to competition, which is robust among chip and handset suppliers in part because Qualcomm’s business model promotes competition.”

Qualcomm is a dominant player in the global communications chip market, owning the highest number of standard essential patents for the 2G, 3G and 4G networks.

The company accounted for 83.1 percent of the 2G chip sector last year and 69.4 percent of the LTE chip market.

Tech giants Samsung Electronics and LG Electronics annually pay 1.5 trillion won in license fee to the company.

The decision by Korean authorities comes amid similar investigations ongoing in Japan, Taiwan, and the US into Qualcomm. The Chinese government in February last year imposed a fine worth 6.08 billion yuan (US$878.2 million) on Qualcomm for antitrust charges.

In the meantime, the amount of penalty marked the highest-ever fine that the FTC has imposed. The earlier record was 668.9 billion won levied on six LPG suppliers in 2010.

By Kim Young-won (wone0102@heraldcorp.com)