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Qualcomm tries to kick holes in logic behind €242M fine

Hopes to avoid paying up for crushing a rival while helping Huawei and ZTE to prosper

Qualcomm on Monday began an attempt to convince the European Union's Court of Justice that it should not pay a €242 million ($258 million) fine imposed on it for anti-competitive behavior.

The fine — worth about two percent of Qualcomm's 2022 profits — was levied against the US chipmaker in 2019. At the time, the European Commission found that Qualcomm had sold 3G baseband chipsets at a loss to harm British rival Icera's ability to compete.

Founded in 2002, Bristol-based Icera produced modem chipsets for the mobile device market and was seen by analysts as a viable competitor to the likes of Qualcomm, Infineon, MediaTek, and Broadcom. The company's success attracted the attention of US chipmaker Nvidia, which acquired the company in 2011. At the time, Qualcomm controlled about 60 percent of the universal mobile telecommunications system (UMTS) baseband market.

In order to prevent Nvidia-controlled Icera from claiming a larger slice of the market, the European Commission says Qualcomm began selling its UMTS chipsets to the likes of Huawei and ZTE at prices its rival couldn't match.

"The targeted nature of the price concessions made by Qualcomm allowed it to maximize the negative impact on Icera's business, while minimizing the effect on Qualcomm's own overall revenues," the commission said at the time.

The European Commission ultimately smacked Qualcomm with a €242 million fine for its behavior. As Qualcomm's profits reached $12.9 billion last year, the fine is significant but not very damaging.

Qualcomm is nevertheless trying to avoid paying the fine. In court Monday, Reuters reports that Qualcomm Attorney, Miguel Rato claimed the European Commission was on a "crusade" against the company. Rato also called into question the basis for the Commission's argument, arguing the specific market for 3G baseband chips accounted for less than a percent of the overall UMTS market at the time.

The Register asked Qualcomm to comment; we'll let you know if we hear anything back.

Qualcomm is no doubt emboldened by its success weaseling its way out of an even larger €997 million fine for alleged bribes paid to ensure Apple used its modems exclusively.

The fine was nullified last summer after the EU General Court uncovered a "number of procedural irregularities" which they said impacted Qualcomm's rights of defense and invalidated the Commission's analysis.

Specifically, the court found that the payments made by Qualcomm to keep its chips in Cupertino's iDevices weren't enough to claim anticompetitive behavior. Further, Apple began deploying Intel modems in its iPhones in 2016 with the launch of the iPhone 7. Apple eventually acquired Intel's modem business in 2019 but has relied on Qualcomm modems ever since.

Despite handing down several billion-dollar-plus fines for anticompetitive behavior over the past few years, the European Commission hasn't had great luck getting them to stick.

Intel escaped a $1.2 billion antitrust fine imposed by Brussels for offering hardware partners rebates for its x86 processors. Chipzilla even bribed German electronics retailer Media Saturn Holding to ensure it did not sell rival AMD's parts.

But after a years-long legal battle, Intel overturned the penalty and was told it didn't have to pay. To add insult to injury, Intel returned to court last spring demanding that the EU pay €593m ($623.5m) in interest charges.

As we reported last month, Intel may still face EC fines as not all of the findings in the original case were overturned. Brussels is in the process of determining a new fine against Intel for its alleged conduct. ®

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