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European General Court throws out €1 billion fine against Qualcomm

Law court crime punishment

Chip firm Qualcomm won its fight against a €1 billion fine imposed on it by the European Commission for allegedly bribing Apple into using its chips.

The European General Court essentially decided that procedural irregularities in the initial investigation by the European Commission ‘affected Qualcomm’s rights of defence’, and has moved to annul the hefty fine.

The EC slapped Qualcomm with the €997 million ticket back in 2018 for what it called ‘abuse of dominance’ on the worldwide market for LTE chips chipsets between 2011 and 2016. The investigation opened in July 2015, and in the nutshell the EC’s finding was that Qualcomm directly bribed Apple to keep using its chips in iPhones and iPads.

“Qualcomm illegally shut out rivals from the market for LTE baseband chipsets for over five years, thereby cementing its market dominance,” said Commissioner Margrethe Vestager at the time of the announcement. “Qualcomm paid billions of US 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 Commission asserted that this meant that no rival could effectively challenge Qualcomm in this market and that its behaviour ‘denied consumers and other companies more choice and innovation – and this in a sector with a huge demand and potential for innovative technologies.’

Qualcomm subsequently fought the decision, and it came out in the wash that the European Court of Justice clearly didn’t like the way EC went about its investigation, and said in an announcement of the annulled fine:

By today’s judgment, the General Court annuls, in its entirety, the Commission decision. The General Court bases its conclusions on, first, the finding of a number of procedural irregularities which affected Qualcomm’s rights of defence, and, second, an analysis of the anticompetitive effects of the incentive payments.

The Commission did not provide an analysis which makes it possible to support the findings that the payments concerned had actually reduced Apple’s incentives to switch to Qualcomm’s competitors in order to obtain supplies of LTE chipsets for certain iPad models to be launched in 2014 and 2015.

The court action is specific to the situation between Qualcomm and Apple, made murkier because of some overlapping legal fracas between the two of them. However it can also be seen in the context of the EU’s escalating legal action against all sorts of Silicon Valley firms, or Big Tech as they have more generally come to be known. Each case will take its own path based on the particulars involved, but no doubt the battalions of lawyers amassed on either side of these legal skirmishes will take notice of today’s decision by the General Court.

 

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