EU’s second-highest court dismisses $1.05B antitrust fine against Qualcomm

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The European Union’s second-highest court today dismissed a $1.05 billion fine issued to Qualcomm Inc. over the company’s business practices in the mobile modem market.

The fine was issued in January 2018 by the European Commission, the EU’s executive arm and antitrust enforcer. The commission said in a statement to Reuters that it will study the judgment and consider its next steps.

Qualcomm is a leading maker of the modem chips that mobile devices use to connect to carrier networks. One of the company’s customers is Apple Inc., which uses its modem chips to power the networking features of its iPhones and iPads. The $1.05 billion antitrust fine that the European Commission issued to Qualcomm in 2018 relates to the company’s chip supply agreement with Apple.

The commission issued the fine over a series of payments that Qualcomm made to the iPhone maker between 2011 and 2015. In return for the payments, which were worth billions of dollars, Apple agreed exclusively to use the chipmaker’s LTE modems in iPhones and iPads. The commission found that the companies’ agreement may have harmed competition by reducing Apple’s incentive to buy LTE modems from suppliers other than Qualcomm.

In its ruling today, the EU’s General Court said the decision to dismiss the fine against Qualcomm was motivated by two main reasons. The first reason is that the court discovered a “number of procedural irregularities” in the way the antitrust case was managed. Additionally, the ruling stated that regulators “failed to take account of all of the relevant factual circumstances” before issuing the fine.

Many of the LTE modems that Apple purchased from Qualcomm between 2011 and 2015 were incorporated into iPhones. Regulators fined Qualcomm after determining that, by paying Apple to exclusively use its LTE modems, the chipmaker could have harmed the competition. However, the General Court determined that this was not the case because “Apple had had no technical alternative to Qualcomm’s LTE chipsets” for iPhones.

Another part of the ruling focuses on modems that Qualcomm supplied for Apple’s iPads. The European Commission found that Qualcomm had reduced Apple’s incentive to add LTE modems from other suppliers to the 2014 and 2015 iPad lineups. In its ruling, the General Court stated that 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.”

The development comes a few months after the General Court dismissed a $1.2 billion antitrust fine against Intel Corp. over some of its business practices in the personal computer market. The court had originally upheld the antitrust fine in a 2014 decision. It was later instructed by the EU’s top court, the Court of Justice of the European Union, to reexamine the case. 

The Court of Justice could potentially also play a role in the Qualcomm case down the line. According to Reuters, the European Commission has the option to appeal to the court in connection with the dismissal of the antitrust fine that it issued to Qualcomm. 

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