(CN) – The European Commission fined technology giant Qualcomm over $1.2 billion Wednesday after finding the company had abused its dominance in the cellphone chipset market and suppressed competition.
After a 2 ½ year investigation, the commission found Qualcomm kept rivals out of the market for LTE chipsets – essential for cellphones and tablets to connect to cellular networks – by making “significant payments to a key customer on the condition it would not buy from rivals.”
The key customer was Apple, which the commission said received billions to use Qualcomm chipsets exclusively in iPhones and iPads.
“These payments were not just reductions in price – they were made on the condition that Apple would exclusively use Qualcomm’s baseband chipsets in all its iPhones and iPads,” competition commissioner Margrethe Vestager said in a statement.
“This meant that no rival could effectively challenge Qualcomm in this market, no matter how good their products were. Qualcomm's behavior denied consumers and other companies more choice and innovation – and this in a sector with a huge demand and potential for innovative technologies. This is illegal under EU antitrust rules and why we have taken today's decision,” Vestager added.
The commission said Qualcomm and Apple first signed the exclusivity agreement in 2011, and in 2013 extended it to 2016. After the agreement ended Apple began buying chipsets from Intel, which investigators found it had considered doing until wooed by Qualcomm.
The commission based its fine on the length of the antitrust infringement – five years, six months and 23 days – and on the basis of Qualcomm’s direct and indirect sales of LTE baseband chipsets in the EU economic zone.
At 997,439,000 euros, or just under $1.24 billion, the fine equals 4.9 percent of Qualcomm’s turnover in 2017.
Qualcomm faces several legal actions in the United States as well, including one brought by Apple claiming the chipset giant stopped making payments after Apple cooperated with South Korean regulators, an antitrust suit brought by the Federal Trade Commission, and a class action brought by consumers who say the company’s practices force them to pay more for cellphones and tablets.