South Korea’s Fair Trade Commission (FTC) has said that semiconductor and telecoms company Qualcomm is facing a fine of up to 1 trillion won (about $875 million) for allegedly violating antitrust regulations, according to a Korea Times report.
This comes some 17 months after Qualcomm was ordered to pay a $975 million fine to the Chinese authorities to settle an antitrust case there and also granted improved terms to access Qualcomm’s extensive portfolio of patents essential to 3G/4G cellular communications.
The South Korean FTC’s investigation started at about the same time as China’s was finishing.
“Qualcomm’s business model is still controversial because it charges excessively high licensing fees and requires unfair conditions for use of its patents,” the Korea Times report quoted an FTC official saying. He also said the antitrust agency will take steps to stop Qualcomm taking advantage of its dominant position.
It appears that the FTC has already decided on the verdict but it will set the final fine after reviewing a response from Qualcomm. The announcement could come as soon as this week, according to another report.
One of the things Qualcomm has insisted on in the past is that chip purchasers pay a patent royalties based in equipment pricing rather than on chip pricing. During its findings against Qualcomm China struck a deal that knocked about a third of the cost of such licensing while licensees elsewhere pay at the original rate (see China Deal Squeezes Royalty Cuts from Qualcomm).
“Qualcomm has been collecting royalty fees from mobile phone manufacturers based on certain fixed rates from the suggested price of a mobile device. Qualcomm should have sought royalty fees based on each chipset,” the report quoted an FTC official saying.
Qualcomm is collecting about $1.27 billion in royalty fees annually from Korean consumer electronics manufacturers such as Samsung and LG Electronics.
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