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Qualcomm antitrust hearings end with fight over jurisdiction

The EU’s second-highest court wrapped up three days of hearings over a more than $250 million fine against semiconductor maker Qualcomm for selling its chips at a loss to force competitors out of the market.

LUXEMBOURG (CN) — Brussels and Qualcomm spent the last day of hearings on Wednesday debating whether the European Commission even had jurisdiction to investigate the anti-competitive behavior it fined the tech giant for in 2019.

The San Diego-based company is fighting a 242 million euro ($255 million) fine before the European General Court for selling chipsets in Asia at a loss in order to drive competitors out of the market. 

Lawyers for Qualcomm called the predatory pricing case “novel and highly unusual,” arguing the European Commission, the European Union's executive body, overstepped its mandate by investigating transactions that were outside of its territory.

The electronic components are made by “an American company, manufactured in Asia and sold to Chinese customers,” Qualcomm’s lawyer Mark English told the Luxembourg-based EU court on Wednesday. 

Brussels pushed back, calling the conclusions from its multi-year investigation “conservative” and saying devices containing the chipsets were sold within the borders of the 27-member political and economic union. 

The allegations of wrongdoing date from 2009 to 2011. At the time, Brussels claims Qualcomm was deeply concerned about startup rival Icera, which was producing rival chipsets for now nearly obsolete technology called “dongles" that allow tablets and laptops to connect to Wi-Fi. 

The London-based tech company folded in 2011.

“Qualcomm’s activities likely prevented others from entering the market,” commission lawyer Carlos Urraca Caviedes said.

The remainder of Wednesday's hearing focused on the fine levied by the commission.

“Because there has been no infringement, of course, no fine is warranted,” English said. But even if the judges were to find some anti-competitive behavior, the fine should be reduced, Qualcomm’s lawyer argued, claiming it was exorbitantly high and more in line with “cartel behavior.” 

The EU argued its fine calculation, representing 1.27% of Qualcomm's 2018 revenue, was actually a conservative estimate favorable to the company. 

Hearings on Monday opened with accusations by Qualcomm of mismanagement and bias in the investigation. The company said the case has been through more than 20 managers, leading to delays and degradation of evidence. One customer, ZTE, told regulators it was unable to provide information about the sales because all of the employees involved have since left the company. 

On Tuesday, the commission fought back, arguing that Qualcomm’s appeal was so extensive because it was a haphazard attempt to find some argument the judges might be sympathetic to, rather than an indication of large-scale problems with the investigation. Brussels lawyers read from internal documents seemingly showing a plan by Qualcomm to push out Icera.

A ruling is expected in the case by the end of the year. 

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. 

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