Qualcomm Inc, the world's second-largest maker of mobile phone chips, is being investigated by the EU over allegations it overcharges Nokia Oyj, Ericsson AB and other handset manufacturers.
The European Commission, the EU's Brussels-based antitrust authority, said in a statement today that it's "opening proceedings" against Qualcomm following complaints by phonemakers that the company charges excessive royalty rates on chips used in next-generation mobile devices.
"We are pleased that the commission has decided to give the case priority status to move it forward swiftly to resolution," Qualcomm President Steve Altman said in a statement. He said the complaints are "without merit" and motivated by "commercial considerations."
The case focuses on how revenue is shared in the more than US$200 billion industry to supply equipment for third-generation mobile phones, which allow users to access the Internet and play videos. Qualcomm contends its patents entitle it to royalties on all of the newest 3G handsets. Rivals say Qualcomm has fewer patents on 3G phones than on earlier versions and should lower its rates.
An EU probe could lead to Qualcomm being forced to lower its rates or fined as much as 10 percent of sales. The EU could decide to settle the case, drop the investigation or file formal charges.
"The commission will conduct an in-depth investigation of the case as a matter of priority," the EU regulator said in a statement. Commission investigations, unlike reviews of mergers, have no strict deadlines. "Their duration depends on a number of factors, including the complexity of each case, the extent to which the undertakings concerned co-operate with the commission and the exercise of the rights of defense."
The probe comes almost two years after Nokia and Ericsson said Qualcomm reneged on an agreement to provide its technology under fair and reasonable terms.
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