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EU probes Qualcomm over possible antitrust issues

Dominance and predatory pricing to be looked at

The European Commission has opened two antitrust investigations into possible abusive behaviour by chipzilla Qualcomm, including allegations of "predatory pricing".

The investigation concerns Qualcomm's baseband chipsets used to process communications in smartphones, tablets and other mobile broadband devices. Qualcomm is the world's largest supplier of baseband chipsets.

The first probe will examine whether Qualcomm breached EU antitrust rules prohibiting the abuse of a dominant market position by offering financial incentives such as payments or rebates to customers on condition that they buy the baseband chipsets exclusively, or almost exclusively, from Qualcomm.

The second will look into whether Qualcomm engaged in 'predatory pricing' by charging prices below costs, with the intention of hindering its competition from remaining in the market and competing with Qualcomm.

The probes are in response to a questionnaire sent out by the EC to Qualcomm's competitors in Europe in May.

Margrethe Vestager, EU commissioner of competition policy, said the investigations were part of its work to ensure suppliers can compete on the merits of their products.

"Many customers use electronic devices such as a mobile phone or a tablet and we want to ensure that they ultimately get value for money. Effective competition is the best way to stimulate innovation," she said.

The firm is no stranger to antitrust cases. In February it settled a dispute in China over alleged abuses of its dominant position in the smartphone chips market and coughed up $1bn (£640m).

Qualcomm said in a statement: "We were informed that the European Commission has taken the procedural step of “initiating proceedings” against Qualcomm with regard to the two ongoing investigations into Qualcomm's sale of chipsets for mobile devices."

"This step allows investigators to gather additional facts, but it represents neither an expression by the Commission on the merits of the case, nor an accusation against the company," it added.

"While we were disappointed to hear this, we have been cooperating and will continue to cooperate with the Commission, and we continue to believe that any concerns are without merit," the chip giant concluded.

In 2009, Intel was ordered to pay €1.06bn to the EC for anti-competitive pricing behaviour.

Natasha Pearman, associate at law firm Pinsent Masons, said there were parallels with Intel. "These are quite serious allegations, so the Commission must be quite confident to open it."®

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