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Qualcomm accuses EU of mismanagement, bias at antitrust hearing

The European Commission fined the semiconductor maker over $250 million for selling its chips at a loss in order to drive competitors out of the market.

LUXEMBOURG (CN) — San Diego-based tech giant Qualcomm complained about the length of an antitrust investigation on the first day of hearings before the European Union’s second-highest court on Monday, accusing Brussels of pursuing claims of anticompetitive behavior despite having no evidence.

The chipmaker is at the European General Court fighting a 242 million euro ($255 million) fine for abusing its dominance in the chip market handed down by the EU, which claims Qualcomm sold chipsets below cost to illegally undercut competitors. 

“Chronic mismanagement and blatant prosecutorial bias” is how Miguel Rato, one of Qualcomm’s lawyers, characterized the EU’s case against the company.

The investigation, which opened in 2015, uncovered alleged misbehavior from 2009 to 2011, now more than a decade ago. 

At the time, Brussels claims, Qualcomm was deeply concerned about startup rival Icera, which was producing the sets of electronic components for now nearly obsolete technology called “dongles" that allow tablets and laptops to connect to Wi-Fi. 

The practice Qualcomm is accused of, known as predatory pricing, involves selling products at a steeply discounted price to block rivals from selling their own goods. The European Commission, the EU's executive body, says that for several years, Qualcomm sold cheap chipsets to Chinese telecom companies ZTE and Huawei. According to the commission, the pair made up more than 50% of the buying market for the chipsets. 

Qualcomm claims the case has been through more than 20 managers, leading to delays and degradation of evidence. ZTE told regulators it was unable to provide information about the sales because all of the employees involved have since left the company.

“It is a great pity to conclude that ZTE cannot provide the information,” the partially state-owned company said in an email read out in court Monday by Qualcomm's counsel.

The hearing quickly delved into the technical details of antitrust law, with both sides calling on economists to speak to the specifics. The practice is unusual before the Luxembourg-based court, which usually only hears from legal professionals, but the court's president, Dean Spielmann, allowed an exception so long as the economists were "under the supervision" of a lawyer. 

Hearings are scheduled for three days, in part because Qualcomm has appealed the fine on 15 points of law.

Last year, the same court overturned a much larger fine levied against Qualcomm stemming from the same investigation. The General Court cited “procedural irregularities” when annulling the 997 million euro ($1.07 billion) fine Brussels issued against Qualcomm for paying smartphone maker Apple not to use chips from rival companies. EU regulators have declined to appeal that decision. 

The European Commission argues the two cases are significantly different and that it supplied the court with some 50 pages of documents showing Qualcomm saw Icera as a “real threat,” the commission's lawyer Carlos Urraca Caviedes told the three-judge panel. 

California-based Nvidia bought Icera for $367 million in 2011, only to shut down the British-based company four years later. Nvidia, which has joined the case as an intervening party, claims it was forced to shutter Icera because of Qualcomm’s anticompetitive behavior. The company is also suing Qualcomm over the alleged illegal practices in the U.K. 

Hearings will resume on Tuesday. 

Categories:Business, Government, International, Technology

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