Following the competition court victory over Microsoft, the European Commission has started formal anti-trust proceedings against Qualcomm Incorporated, concerning the alleged breach of EC Treaty rules on abuse of a dominant market position.
Qualcomm is a US chip manufacturer and holder of the intellectual property rights in the CDMA and WCDMA (part of the 3G standard for European mobile phone technology) standards for mobile phones. The investigation is a result of separate complaints lodged by six European, US and Japanese mobile phone and/or chipset manufacturers including Ericsson and Nokia.
The alleged infringement is that the terms under which Qualcomm licences its patents, which are essential to the WCDMA standard, are not fair, reasonable and non-discriminatory (FRAND) and therefore the licensing terms and royalties may breach EC competition rules.
The principle underlying the FRAND commitments is that essential patent holders should not be able to exploit the extra power they have gained as a result of having technology based on their patent incorporated in the standard.
The complaints also allege that charging non-FRAND royalties could result in final consumers paying higher prices for handsets, a slower development of the 3G standard with all of the related negative consequences for economic efficiency associated with this slower development.
The commission said it would conduct an in-depth investigation as a matter of priority and that there was no fixed timetable under which it must operate.
The case highlights how confident the Commission now is on anti-trust matters in the wake of the Microsoft judgment last month. The Commission tends to be a trendsetter in that authorities have tended to mirror the commission and as such this case could have a knock-on effect at a national level as well as a European one.