Thu, Jan 25, 2018 - Page 1 News List

Qualcomm to pay fine in installments

NO CHOICE:Qualcomm’s payment plan was approved so it could sustain its operations, the FTC said of the company that used its position to manipulate the handset market

By Ted Chen  /  Staff reporter

Minister of Economic Affairs Shen Jong-chin, left, comments on the Fair Trade Commission’s fine on Qualcomm yesterday during an interview in Taipei.

Photo: Lin Chin-hua, Taipei Times

The Fair Trade Commission (FTC) yesterday approved Qualcomm Inc’s application to pay a NT$23.4 billion (US$798.6 million) fine for breaching the nation’s antitrust regulations in 60 installments.

The US company would pay about NT$390 million in each installment, with the first installment due at the end of this month, the commission said.

The payment plan was approved out of consideration for Qualcomm’s need to reserve enough funds to sustain its operations, and because the penalty is the largest since the FTC’s inception in 1992, the commission said.

Qualcomm has also backed its promise to pay the fine with promissory notes, the commission added.

The massive fine was handed to Qualcomm in October last year following a two-year investigation by the commission, which resulted in a ruling that the company had hampered market competition by using its position as the world’s largest handset chip designer to manipulate prices.

Handsets are one of the most important aspects of the nation’s export-oriented technology sector and Qualcomm’s actions had affected the entire supply chain, the commission said.

In particular, Qualcomm had leveraged its patent portfolio in radio communication technology standards to pressure local suppliers, who were often forced into unfavorable licensing deals, the commission said.

Qualcomm holds key patents in all major networking standards, including code-division multiple access, wideband code division multiple access and long-term evolution.

The commission estimated that during the seven years of unfair practices between 2005 and 2015, local suppliers had paid about NT$400 billion in licensing fees and purchased US$30 billion worth of baseband radio processors from Qualcomm.

The Ministry of Economic Affairs would not comment on the Qualcomm case, as it respects the commission’s decision, Minister of Economic Affairs Shen Jong-chin (沈榮津) said yesterday.

“To maintain the nation’s economic growth, industry development cannot be halted by fair-trade measures,” Shen told reporters ahead of the FTC’s approval of Qualcomm’s installment payment plan.

The ministry wants to maintain a close relationship with Qualcomm in terms of 5G technology development in Taiwan, he said.

Separately, the EU yesterday hit Qualcomm with an antitrust fine of 997 million euros (US$1.2 billion) for paying Apple Inc to exclusively use its chips in iPhones and iPads.

EU Commissioner for Competition Margrethe Vestager said that by striking the agreement with Apple in 2011, Qualcomm had “abused its market dominance” to unfairly shut out rival chipmakers such as Intel Corp, thus denying choice to consumers.

“Between 2011 and 2016, Qualcomm paid billions of US dollars to a key customer, Apple, and the payment was to prevent Apple to buy from rivals,” Vestager said.

“This meant that no rival could effectively challenge Qualcomm in this market, no matter how good their products were,” she added.

The Danish commissioner said that Qualcomm had “denied consumers and other companies more choice and innovation.”

Additional reporting by Lauly Li and AFP

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