South Korea fines Qualcomm mobile chip giant $854 million

PanARMENIAN.Net - South Korea's antitrust regulator fined Qualcomm Inc 1.03 trillion won ($854 million) for what it called unfair business practices in patent licensing and modem chip sales, a decision the U.S. chipmaker said it will challenge in court, Reuters reports.

The fine, the largest ever levied in South Korea, marks the latest antitrust setback for Qualcomm's most profitable business of licensing wireless patents to the mobile industry, at a time when the business is facing headwinds from a cooling smartphone market.

The Korea Fair Trade Commission (KFTC) ruled on Wednesday, December 28 Qualcomm abused its dominant market position and forced handset makers to pay royalties for an unnecessarily broad set of patents as part of sales of its modem chips.

Qualcomm also restricted competition by refusing or limiting licensing of its standard essential patents related to modem chips to rival chipmakers such as Intel Corp, Samsung Electronics Co Ltd and MediaTek Inc, the regulator said, hindering their sales and leaving their products vulnerable to lawsuits.

The regulator ordered Qualcomm to negotiate in good faith with rival chipmakers on patent licensing and renegotiate chip supply agreements with handset makers if requested - measures that would affect the U.S. firm's dealings with major tech companies including Apple Inc, Intel, Samsung and Huawei Technologies Co Ltd [HWT.UL] if upheld.

The KFTC said it began its investigations into Qualcomm's practices in 2014 following complaints from industry participants, but did not name specific companies.

Foreign companies including Apple, Intel, MediaTek and Huawei expressed their views during the regulator's deliberation process, KFTC Secretary General Shin Young-son told a media briefing in the country's administrative capital.

"We investigated and decided on these actions because Qualcomm's actions limit overall competition," Shin said, adding that the ruling was not about protecting domestic companies such as Samsung and LG Electronics Inc but about improving market competition for all players.

Qualcomm said it will file for an immediate stay of the corrective order and appeal the decision to the Seoul High Court. The firm will also appeal the amount of the fine and the method used to calculate it.

"Qualcomm strongly disagrees with the KFTC’s announced decision," it said in a statement.