EU fines chipmaker Qualcomm 1b euros for Apple deal

BRUSSELS — The EU on Wednesday hit US chipmaking giant Qualcomm with an antitrust fine of 997 million euros ($1.2 billion) for paying Apple to use its chips exclusively in iPhones and iPads.

EU Competition Commissioner Margrethe Vestager said that by striking the agreement with Apple in 2011 Qualcomm had "abused its market dominance" to unfairly shut out rivals such as Intel, denying choice to consumers.

The fine is the latest blow struck by the EU against US tech giants and also a fresh hit for Qualcomm, the leading global supplier of smartphone chips, following another antitrust fine of $800 million imposed by authorities in Taiwan last year.

"Qualcomm cemented its position by illegally shutting out rivals from the market for over five years," Vestager told a press conference.

"Between 2011 and 2016 Qualcomm paid billions of US dollars to a key customer, Apple, and the payment was to prevent Apple to buy from rivals", Vestager said.

"This meant that no rival could effectively challenge Qualcomm in this market, no matter how good their products were."

Qualcomm said it would appeal against the ruling.

"We are confident this agreement did not violate EU competition rules or adversely affect market competition or European consumers," Qualcomm's Don Rosenberg said in a statement.

'Choice and innovation' hampered 

The deal involved so-called chipsets that enable smartphones to send and receive voice calls and data over cell networks. 

The Danish commissioner said that Qualcomm had "denied consumers and other companies more choice and innovation".

Vestager said the EU's two-and-a-half year probe uncovered internal Apple documents showing it was "seriously thinking about switching" to Qualcomm's rival Intel on several occasions.

"This would have made a big difference to Intel. Apple is one of the largest makers of smartphones and tablets in the world. In the end Apple decided not to make the change," Vestager said.

The level of the fine, which amounts to 4.9 per cent of Qualcomm's turnover in 2017, "takes account of the duration and gravity of the infringement, and is aimed at deterring market players from engaging in such anti-competitive practices in the future," the commission said.

Qualcomm and Apple are currently entangled in a bitter legal dispute over patents and royalties, though Vestager said she did not expect Wednesday's ruling to have an impact on this.

"This is a well framed matter and it has nothing to do with IP [intellectual property], it has to do with misuse of dominant position and exclusivity payments, so it's a completely different line of thinking," Vestager said.

The iPhone manufacturer filed a US lawsuit in January 2017 accusing Qualcomm of abusing its market power for certain mobile chipsets to demand unfair royalties.

The EU has turned the screw on US tech giants recently, ordering Apple in 2016 to repay 13 billion euros in back taxes to Ireland, and hitting Google with a record 2.4-billion-euro fine in June last year for illegally favouring its shopping service in search results.