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Tribune News Service
Tribune News Service
Business
Mike Freeman

Qualcomm triumphs in appeal to overturn $1.04 billion fine linked to 4G supply agreement with Apple

After four years in court, a European tribunal has thrown out a $1.04 billion antitrust fine against San Diego's Qualcomm over incentive payments linked to supplying Apple with 4G smartphone chips.

The ruling from the General Court of the European Union in Brussels vacates the fine and requires the European Commission to pay Qualcomm's legal costs. It could end a years-long anti-monopoly battle against Qualcomm by European regulators, which began with an anonymous complaint in 2014.

In January 2018, the head of the European Commission's antitrust arm levied the huge fine. Qualcomm immediately appealed.

The court found several "procedural irregularities" in the case. They included withholding information regarding meetings and conference calls with unnamed third-party informants — including two Qualcomm competitors and two of its customers.

Without that information, Qualcomm could not adequately defend itself against the allegations that it had abused its dominance in the LTE chipset market from 2011 to 2016, according to the ruling.

Moreover, the court stated that regulators fell short in considering additional factors when they branded Qualcomm's business practices as anti-competitive.

Regulators argued that Qualcomm gave Apple incentive payments to use the San Diego company's 4G baseband processors in iPhones from 2011 to 2016.

"The Commission took the view that those payments, which it characterized as exclusivity payments, were capable of having anticompetitive effects in that they had reduced Apple's incentives to switch to competing LTE chipset providers," according to the court.

But the judges pointed out that Qualcomm's rivals could not meet Apple's technical requirements for 4G chips during much of this time period, and regulators ignored the role that performance played in Apple's decision to stick with Qualcomm.

A Qualcomm spokesperson said the company is pleased with the court's decision.

The fine came as Qualcomm battled with Apple, the U.S. Federal Trade Commission and anti-monopoly regulators worldwide over its business practices.

In the end, Apple settled lawsuits with Qualcomm suits in 2019, agreeing to license Qualcomm's patent portfolio for at least six years and use its 5G baseband chipsets in iPhones for an unspecified number of years.

In 2020, the U.S. Ninth Circuit Court of Appeals found that Qualcomm's business practices did not violate U.S. antitrust laws — overturning a lower court decision. The FTC declined to pursue the case to the U.S. Supreme Court.

Qualcomm shares ended trading Wednesday up slightly at $130.03 on the Nasdaq exchange.

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