Qualcomm hit with €146 million fine for stifling competition in South Korea

American telecommunications company Qualcomm has been slapped with a $208 million (€146 million) ban in South Korea. The Korean Fair Trade Commission (KFTC) had been investigating Qualcomm for over three years, and claims that its technology licensing practices are anti-competitive. Qualcomm disagrees with the fine, and has announced its intention to appeal it in court.

The KFTC claims that Qualcomm had obtained a 99.4% share in the CDMA mobile chipset market, and that it abused that position. The KFTC claims it used that position of power to discriminate against companies that used any other manufacturers chips in mobile devices. The Commission also says that Qualcomm granted unfair rebates to favoured customers. Korean clients of QualComm include two of the three biggest handset manufacturers in the world, LG and Samsung.

Along with the fine, the KFTC has ruled that Qualcomm must cease all unfair practices. From what I’ve read, there are two problems with that:

1) It can’t affect currently held contracts in the country. And as these contracts tend to be very long-term, this ruling will create no real changes in South Korea for some time.
2) Qualcomm will fight it tooth and nail. The KFTC should prepare itself for a long, tiring journey through the Korean Courts.

According to Reuters, Qualcomm is also under investigation for ant-competitive behaviour by the European Commission.

From the report:

The Korean Fair Trade Commission: “When licensing its CDMA mobile technology, Qualcomm levied higher royalties on companies that use modem chips supplied by its rival firms.”

Qualcomm Korea: “The findings of [the KFTC] are based on serious factual and legal errors and that the company’s practices are lawful, appropriate and pro-competitive.”

What we think?

This is going to be messy. If everything the KFTC says is true, then I’d be happy to see Qualcomms SK operation broken down. Qualcomm will be able to afford a crack team of highly trained combat lawyers to argue their case, but this isn’t KFTCs first time. It has previously handed out massive fines to another telecom operator, as well as Microsoft.