Qualcomm Fined $1.23 Billion By European Union Over Apple Deal

SAN DIEGO, CA – The executive arm of the European Union Wednesday fined San Diego-based mobile chip maker Qualcomm more than $1.23 billion dollars for violating antitrust laws.

Shortly after the fine was announced Wednesday morning, Qualcomm said it would appeal the finding by the European Commission, which comes at a critical time for one of the few major corporations based in San Diego. The company has been targeted for a hostile takeover by rival chipmaker Broadcom and is embroiled in a legal dispute with Apple.

The fine announced Wednesday was the result of a deal between Qualcomm and Apple that the European Union's commissioners said violated EU laws.

"Qualcomm illegally shut out rivals from the market for LTE baseband chipsets for over five years, thereby cementing its market dominance," Commissioner Margrethe Vestager said in a statement. "Qualcomm paid billions of dollars to a key customer, Apple, so that it would not buy from rivals. These payments were not just reductions in price -- they were made on the condition that Apple would exclusively use Qualcomm's baseband chipsets in all its iPhones and iPads."

The sweetheart deal for Qualcomm meant no rival could effectively challenge Qualcomm, even if the rivals' products were superior, the commissioners found.

"Qualcomm's behavior denied consumers and other companies more choice and innovation -- and this in a sector with a huge demand and potential for innovative technologies," Vestager said. "This is illegal under EU antitrust rules and why we have taken today's decision."

In a statement, Qualcomm executives said the company would appeal the fine.

"We are confident this agreement did not violate EU competition rules or adversely affect market competition or European consumers," said Don Rosenberg, executive vice president and general counsel of Qualcomm. "We have a strong case for judicial review and we will immediately commence that process."

Company officials said the issue at the center of the fine related to a five-year contract that expired in 2016 and the "decision does not relate to Qualcomm's licensing business and has no impact on ongoing operations."

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By City News Service

AP Photo/Gregory Bull