Qualcomm Faces $854 Million in Fines from South Korea Antitrust Regulator

South Korea’s antitrust agency fined QUALCOMM Incorporated (NASDAQ: QCOM) a record 1.03 trillion won ($853 million) for violating antitrust laws, saying that U.S. chip maker had unfair business model over its patent-licensing business and chip sales.

The South Korean Fair Trade Commission (KFTC) said Wednesday that Qualcomm violated the laws by pressuring rivals and mobile-phone makers into unfair deals. It includes limiting the access of its essential patents to competing chipset makers such as Intel Corp and Samsung Electronics Co Ltd and forcing mobile-phone maker into unfair license agreement when selling its crucial phone chips.

“Qualcomm, a holder of standard-essential patents as well as a monopolistic service provider of modem chips from manufacturing to sales, has violated its agreement to license patents on fair reasonable and non-discriminatory terms, known as FRAND,” the commission said in a statement.

Patent-licensing business is Qualcomm’s most profitable business. The company earned about $6.5 billion by selling the right of using its technology to smartphone makers in its most recent financial year, representing 32.8 percent of the company’s total revenue.  Qualcomm said it will appeal the decision in Seoul’s High Court.

The decision raised concerns on Qualcomm’s patents business. The company is also under investigations in the U.S. and Europe. In February last year, Qualcomm settled a 14-month probe in China by paying a $975 million fine.

“The KFTC ruling will not just benefit local handset makers but other global chipset makers too, so today’s ruling from the commission seems a bit broader and stronger than that of China’s last year,” said Jung Dong-joon, a patent lawyer at SU Intellectual Property. “Qualcomm sales accounts for about 20 percent in the Korean market and that’s a significant market for Qualcomm.”

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