Qualcomm has been heavily fined for anti-competitive practices by the Chinese government after a long investigation of the company.
It seems Qualcomm has run in to a rough patch recently, with reports of heating issue with its latest processor, the rumoured loss of a premium partner and now being imposed a fine for anti-competitive practices in China. According to the National Development and Reform Commission (NDRC), officials carried out a 14 month long investigation of Qualcomm's revenues, patent policies and royalties before reaching the decision to fine the American company.
The final figure that Qualcomm is expected to pay the NDRC is 6.088 billion Chinese Yuan ($975 million US dollars), which is the highest fine imposed on any company in China so far. In addition to this, Qualcomm will have to lower its patent royalties and licensing policies for essential patents in the country.
China has approved the rectification plan formulated by Qualcomm which is as follows:
- Qualcomm will offer licenses to its current 3G and 4G essential Chinese patents separately from licenses to its other patents and it will provide patent lists during the negotiation process. If Qualcomm seeks a cross license from a Chinese licensee as part of such offer, it will negotiate with the licensee in good faith and provide fair consideration for such rights.
- For licenses of Qualcomm's 3G and 4G essential Chinese patents for branded devices sold for use in China, Qualcomm will charge royalties of 5% for 3G devices (including multimode 3G/4G devices) and 3.5% for 4G devices (including 3-mode LTE-TDD devices) that do not implement CDMA or WCDMA, in each case using a royalty base of 65% of the net selling price of the device.
- Qualcomm will give its existing licensees an opportunity to elect to take the new terms for sales of branded devices for use in China as of January 1, 2015.
- Qualcomm will not condition the sale of baseband chips on the chip customer signing a license agreement with terms that the NDRC found to be unreasonable or on the chip customer not challenging unreasonable terms in its license agreement. However, this does not require Qualcomm to sell chips to any entity that is not a Qualcomm licensee, and does not apply to a chip customer that refuses to report its sales of licensed devices as required by its patent license agreement.
Qualcomm won't be pursuing further legal proceedings against the NDRC and has agreed to pay the fines in a timely manner.