On the 8th December 2015, Qualcomm, the world’s largest supplier of smartphone chipsets, was publicly accused by the European Commission of abusing its dominant position in the markets for 3G and 4G baseband chipsets. This move by the Commission is significant as it follows a well established formula of the EU Commission taking on high profile cases against major global technology firms and follows the opening of an investigation into Qualcomm in July this year. This has again sparked accusations that the Commission is targeting US firms in preference to their EU rivals.
The Commission announced that it sent Qualcomm statements of objections on two separate alleged abuses of dominance.
The first ground was the accusation that Qualcomm in 2011 had entered into an anti-competitive exclusivity agreement with one of the world’s largest smartphone and tablet manufacturers. The alleged terms of the agreement are that the said manufacturer would only use Qualcomm chipsets, and in return for this exclusivity, Qualcomm would pay the manufacturer for the privilege. The Commission believes this agreement is still in force. Such behaviour would not be anti-competitive for a non-dominant firm but as Qualcomm is dominant, if proved, this behaviour may amount to a breach of Article 102 of the TFEU, the prohibition against the abuse of dominance. This is because the exclusivity with the major manufacturer would harm competition by foreclosing a major market to competitors.
The second alleged breach of Article 102 is that between 2009 and 2011, Qualcomm forced its rival Icera out of the market by selling its own chipsets below cost. It is alleged that it was done at a time Icera was posing a threat to Qualcomm and that the pricing below cost was a targeted action to force Icera out of the market.
Qualcomm has 3 months to respond to the exclusivity payment allegation and 4 months to respond to the accusation of predatory pricing. If found liable by the Commission or if Qualcomm admits guilt, this could be the start of lengthy private litigation by some of the world’s largest technology companies who may feel they have been disadvantaged by the alleged behaviours.