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Competition law: EU Commission gets no fine from Qualcomm

Qualcomm was able to pull its head out of the noose and escape a fine of just under a billion euros. The tech company and leading manufacturer of smartphone CPUs was accused of violating applicable competition law by abusing a dominant market position. Now, however, the EU Commission had to draw the short straw and could not prevail against the company in court.

Procedural error ruins court hearing

The EU Commission probably didn’t like that at all. In 2018, the latter demanded a fine of 997 million euros from Qualcomm. The reason for this, in the view of the EU Commission, was a serious violation of applicable competition law. Naturally, the U.S. manufacturer did not put up with this and immediately initiated legal action against it. Now the court of the European Union has ruled on the matter. The manufacturer of the famous Snapdragon processor does not have to pay the fine. However, this is not because the court considers the chip manufacturer innocent. Rather, the EU Commission must accept the accusation of having made serious procedural errors.

Assumed violation of competition law

The focus of the proceedings was not the relationship between Qualcomm and the many manufacturers of Android smartphones, which for their part largely rely on the Snapdragon brand. Instead, the cooperation between Apple and Qualcomm came into focus. The EU Commission was accused of collusion that was supposed to consolidate Qualcomm as the sole manufacturer for Apple’s chip technology. In order to achieve this goal, the US company is even said to have paid Apple a sum in the billions. This agreement is said to have applied between 2011 and 2016, which prevented competitors such as Intel from competing fairly for a period of five years. In this, the Commission clearly sees a violation of competition law.

Commission decision was too broad

The judges of the ECJ criticized, among other things, the analysis of the EU Commission. While Qualcomm targeted only 4G chipsets at Apple, the Commission formulated its decision as if this problem also existed with UMTS or 3G chipsets. However, this was incorrect and therefore a crucial procedural error. After all, Qualcomm, for its part, assumed all along that only the 4G chips would be affected. Accordingly, it was not possible for the company and its defense to adequately defend itself against allegations. Rather, the Commission should have given the company even more time to respond to the allegation of violation of competition law.

Apple had no alternative

But that was not all the Luxembourg judges found fault with. They were also anything but satisfied with the EU Commission’s view of the market. After all, the judges were of the opinion that Apple had no alternative to Qualcomm as the market leader at the time.

iPhone 6 Plus
One device that was manufactured during the time of the alleged collusion, among others, is the iPhone 6 Plus.

Given the gargantuan numbers of iPhones produced, the California-based tech company had to have a reliable supplier that could deliver cutting-edge LTE technology in sufficient quantities. If this had been different, the commission would have had to prove that Intel, for example, could have supplied the same technology in similarly high quantities. However, this did not happen. Accordingly, the court described the Commission’s decision as unlawful.

The Commission again comes away empty-handed

At the end of the day, the Brussels-based executive body must see itself on the losing side. Now it remains to be seen whether the Commission will simply accept the defeat against Qualcomm or once again strike back. It now has a little more than two months to appeal the court’s decision. As a consequence, the proceedings would then even be taken to the European Court of Justice (ECJ). In view of the huge defeat and the many mistakes made by the EU Commission in these proceedings, however, this is not to be expected at present. Incidentally, Apple and its AppStore are suspected of violating competition law in a relatively recent EU Commission case. Here you can read more about it.

Simon Lüthje

I am co-founder of this blog and am very interested in everything that has to do with technology, but I also like to play games. I was born in Hamburg, but now I live in Bad Segeberg.

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Qualcomm was able to pull its head out of the noose and escape a fine of just under a billion euros. The tech company and leading manufacturer of smartphone CPUs was accused of violating applicable competition law by abusing a dominant market position. Now, however, the EU Commission had to draw the short straw and … (Weiterlesen...)

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