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Qualcomm suffers setback with US antitrust ruling

AFP, WASHINGTON

A man walks past a Qualcomm logo at the Mobile World Congress in Barcelona, Spain, on Feb. 27, 2013.

Photo: Reuters

Smartphone chip giant Qualcomm Inc suffered a fresh blow in its antitrust battle as a US federal judge ruled that it “strangled competition” for years at the expense of consumers and device makers.

Qualcomm shares on Wednesday sank about 10.8 percent to close at a one-month low after the ruling that the company violated antitrust law, in a case with major implications for the smartphone market.

US District Judge Lucy Koh ordered Qualcomm to change its pricing and sales practices, after finding it “engaged in anticompetitive conduct” toward customers.

“Qualcomm’s licensing practices have strangled competition [in the chip market] and harmed rivals,” she said in Tuesday’s 233-page ruling in the lawsuit brought by the US Federal Trade Commission (FTC).

The judge issued an injunction requiring California-based Qualcomm to comply with her order and to submit to monitoring by the FTC for seven years.

FTC Bureau of Competition Director Bruce Hoffman called the ruling “an important win for competition in a key segment of the economy” and said that the agency “will remain vigilant in pursuing unilateral conduct by technology firms that harm the competitive process.”

The company said it would seek an expedited appeal of the ruling.

“We strongly disagree with the judge’s conclusions, her interpretation of the facts and her application of the law,” Qualcomm general counsel Don Rosenberg said in a statement.

Qualcomm’s actions suggested that it could use the same tactics to suppress competition for 5G chips, Koh said.

“There is a sufficient likelihood that Qualcomm will hold monopoly power in the 5G modem chip market such that exclusive dealing agreements for the supply of modem chips could foreclose competition in that emerging market,” she wrote.

Qualcomm must negotiate for its patents on fair and reasonable terms without using threats or discriminatory tactics, the judge ruled.

Koh said that Qualcomm’s actions harmed rivals in the smartphone modem business, including Taiwan’s MediaTek Inc (聯發科) and US-based Intel Corp, which last month pulled out of the market for 5G modems at the same time that Apple Inc settled its case with Qualcomm.

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