Qualcomm Under EC Antitrust Scrutiny For Illegally Trying To Snuff Out Competition

Qualcomm Under EC Antitrust Scrutiny For Illegally Trying To Snuff Out Competition

Telecommunications equipment company Qualcomm is facing antitrust charges in Europe, as the European Commission has alleged that the company has been using unfair tactics to prevent competition. The commission is accusing Qualcomm of abusing its power to bully companies into exclusively using its products.

According to the commission, the United States manufacturer had been bribing major makers of smartphones and tablets to accept several exclusivity clauses that prevent the use of its rivals. These clauses are still in effect today.

Additionally, Qualcomm is being accused of using “predatory pricing” between 2009 and 2011. The company offered certain baseband chipsets below their cost to virtually eliminate all competition.

EU Competition Commissioner Margrethe Vestager said, “I am concerned that Qulacomm’s action may have pushed out competitors or prevented them from competing. We need to make sure that European consumers continue to benefit from competition and innovation in an area which is at the heart of today’s economy.”

The commission mentioned that Qualcomm baseband units that process the functions in mobile devices are found virtually everywhere. According to the commission, Qualcomm has simply dominated this market.

The investigation into Qualcomm has been ongoing since July. If the company is found to be guilty, it could lose out on 10% of its global revenue. In the fiscal year of 2015, the company earned nearly $25.3 billion. Additionally, Qualcomm could be forced to majorly adjust its businesses practices in several key European areas.

Qualcomm has three months to respond to the allegation of exclusivity payments and four months to respond to the allegations of predatory pricing. The company has said that it is fully cooperating with the authorities.

The company said in a statement, “We look forward to demonstrating that competition in the sale of wireless chips has been and remains strong and dynamic, and that Qualcomm’s sales practices have always complied with European law.”

Although Qualcomm is still performing strongly, it hasn’t been at its best lately. The $25.3 billion earnings in in the fiscal year of 2015 represent a 5% loss from the previous fiscal year. Meanwhile, operating income fell by 23% to $5.8 billion. Additionally, Qualcomm is also facing an antitrust investigation in South Korea.

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