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Qualcomm wins EU court battle against $1b antitrust fine

Another setback for competition watchdog as ruling over exclusive chip deal with iPhone nullified

The European Commission's competition enforcer is being handed another defeat, with the EU General Court nullifying a $1.04 billion (€997 million) antitrust fine against Qualcomm.

The decision to reverse the fine is directed at the body's competition team, headed by Danish politico Margrethe Vestager, which the General Court said made "a number of procedural irregularities [which] affected Qualcomm's rights of defense and invalidate the Commission's analysis" of Qualcomm's conduct. 

At issue in the original case was a series of payments Qualcomm made to Apple between 2011 and 2016, which the competition enforcer had claimed were made in order to guarantee the iPhone maker exclusively used Qualcomm chips.

Internal documents released at the time showed Qualcomm believed the exclusivity payments kept Apple from switching to Intel. In 2018 the Commission levied its fine, which Qualcomm appealed immediately. 

Qualcomm has also been fined €242 million ($252 million) in another decision that found it engaged in anticompetitive behavior when it undercut prices to harm rivals. 

The General Court's judgement today annuls the Commission's decision in its entirety, with the court citing its own analysis of the anticompetitive effects of the payments alongside procedural issues as deciding factors. 

Procedurally, the court took issue with the decision's scope being narrower than the statement of objections because the change was made without Qualcomm being given "the opportunity to be heard, and, where necessary, to adapt its analysis," the decision reads. By doing so, Qualcomm's rights of defense were infringed. 

As for the anticompetitive effects of the payments, the General Court said that payments to keep Qualcomm chips in iPhones and iPads "is not sufficient to determine that they were anticompetitive for all of Apple's requirements … 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 to switch to Qualcomm's competitors."

The decision isn't surprising in light of the General Court's decision to reverse a $1.2 billion fine against Intel for similar behavior, alleging it offered hardware partners rebates for using its x86 chips over AMD's. The decision to reverse the fine in that case was similar in reasoning, with the judgement in that case saying that Intel was correct when it accused the Commission of errors that ultimately led to the fine. 

This second defeat makes 2022 an even worse year for Vestager and her associates at the Commission. Prior to January's reversal of the Intel fine, the EC hadn't lost a big antitrust case in 20 years. Vestager took office in 2014.

The General Court is the EU's second-highest legislative body, so Vestager has a chance to appeal, though the process can take years – Intel's fine annulment took 12 years, while Qualcomm needed five.  A European Commission representative told The Register that it has "tak[en] note of today's judgement." The EC didn't have any specifics to share, saying only that it "will carefully study the judgement and its implications and will reflect on possible next steps." ®

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