Chip-maker Qualcomm has been fined a record 1.03 trillion Korean Won (~$850 million) for violating antitrust laws in South Korea. The country's regulator, South Korea's Fair Trade Commission (KFTC), claimed that Qualcomm was forcing handset manufacturers to pay more royalties than required when obtaining chips.
KFTC stated that Qualcomm's "unnecessarily broad patent licensing requirements" resulted in smartphone-makers paying more royalties for the company's chips. The regulatory commission also claimed that Qualcomm limited access to standard essential patents, in order to unfairly compete with other chip-manufacturers. As a result, the KFTC has issued an $853 million fine and stated that it intends "to issue a corrective order relating to the specific practices at issue".
In response, Qualcomm - which is also develops the popular Snapdragon chipsets used in various smartphones - says that the move is "unprecedented", particularly given the fact that it was probed by the KFTC before, yet the commission found nothing questionable. The company also believes that the decision reflects a "flawed process" and lacks coherent theory and evidence. Don Rosenberg, executive vice president and general counsel at Qualcomm, went on to say that:
Qualcomm strongly believes that the KFTC findings are inconsistent with the facts, disregard the economic realities of the marketplace, and misapply fundamental tenets of competition law.
Importantly, this decision does not take issue with the value of Qualcomm’s patent portfolio. Qualcomm’s enormous R&D investments in fundamental mobile technologies and its broad-based licensing of those technologies to mobile phone suppliers and others have facilitated the explosive growth of the mobile communications industry in Korea and worldwide, brought immense benefits to consumers and fostered competition at all levels of the mobile ecosystem.
The executive emphasized that the ruling ignores the "win-win relationship" that Qualcomm has established with other Korean companies, and that the company's repeated requests for process rights (such as the right to view the case files) were denied during the investigation of the KFTC.
According to Qualcomm, the written order for the decision will possibly be released within the next four to six months. When this happens, the company will file for an immediate stay of the corrective order and will appeal the decision, as well as the method used to calculate the fine, in the Seoul High Court. That said, once the written order is issued, Qualcomm will be required to pay the fine within 60 days - which is subject to change, provided how well the appeal goes.