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Qualcomm hit with €242m fine for pushing British rival out of chip market

Hasan Chowdhury
The US chipmaker has been accused of selling its technology at a cut price to force British firm Icera out of the market.  - REUTERS

Apple’s key chip supplier Qualcomm has been fined €242m (£217m) by the European Union for engaging in “predatory pricing” practices that forced a British competitor out of the market.

In a ruling on Tuesday, the European Commission accused the chipmaker of abusing its market dominance in 3G chipsets by selling its technology to Chinese telecoms firms Huawei and ZTE at a cut-price that hampered the business of rival firms.

Qualcomm's chip technology allows smartphones and tablets to connect to cellular networks, and can be used to transmit voice and data.

According to the EC, Qualcomm sold its chips below market price to eliminate Icera, a British semiconductor firm based in Bristol, as a competitor.

Icera is owned by US chipmaking firm Nvidia, which specialises in the design of graphic processing units for the gaming industry.

Margrethe Vestager, the European Commission’s competition chief, claimed that Qualcomm violated the bloc’s antitrust laws by deliberately selling its chipsets at a lower price “with the intention of eliminating” Icera.

“Qualcomm’s strategic behaviour prevented competition and innovation in this market, and limited the choice available to customers in a sector with huge demand and potential for innovative technologies,” she said.

The EC’s four-year investigation into Qualcomm found that Icera was becoming a viable supplier of 3G chipsets at the start of the decade, and posed a growing threat to the US firm’s business.

Qualcomm’s market share of the chipset was at 60pc between 2009 and 2011, which was almost three times the market share of its next biggest competitor, according to the EC.

The EC said these concessions from Qualcomm were “targeted” and “allowed it to maximise the negative impact on Icera's business”.

The fine of €242m represents 1.27pc of Qualcomm's 2018 revenue. The EU had already fined Qualcomm $1.23 billion last year after concluding it bribed Apple to stifle competition.

Qualcomm said it plans to appeal Thursday's fine to an EU court and denied the charges.

"This decision is unsupported by the law, economic principles or market facts, and we look forward to a reversal on appeal," Don Rosenberg, general counsel of Qualcomm, said in a statement.

"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," Rosenberg said

The EU's fine against Qualcomm comes just a day after Vestager's office said it was investigating whether Amazon uses data from independent retailers to gain an unfair advantage, a decision that could lead to changes in how the internet's biggest marketplace works.