Qualcomm (NASDAQ: QCOM) has been the subject of a lengthy European antitrust investigation and has been hit with a fine of EUR 242 Million. The Company is responsible for using predatory pricing to force its main competitor, Icera, out of the market. Qualcomm was responsible for selling 3 of its chipsets below cost to Huawei and ZTE, which violates EU antitrust rules.
In the global market, from 2009 to 2011, Qualcomm maintained a dominant position in the global market for UMTS baseband chipsets, boasting a market share of about 60%. It also employed substantial investments in R&D for designing the chipsets and provided a barrier through the numerous patents the Company holds. European competition laws state that those in a dominant market position are especially responsible for not abusing their power to reduce or restrict competition.
Qualcomm’s executive Vice President, Don Rosenburg, stated in a press release, “The Commission spent years investigating sales to two customers, each of whom said that they favored Qualcomm chips not because of price but because rival chipsets were technologically inferior. This decision is unsupported by the law, economic principles or market facts, and we look forward to a reversal on appeal,” he writes. “The Commission’s decision is based on a novel theory of alleged below-cost pricing over a very short time period and for a very small volume of chips. There is no precedent for this theory, which is inconsistent with well-developed economic analysis of cost recovery, as well as Commission practice.