EU tipped to sanction Qualcomm over Apple chip deal with potential $2B fine

Posted:
in General Discussion
The European Commission is reportedly preparing to sanction Qualcomm for anti-competitive practices in supplying components to Apple for use in its iPhones, with the antitrust watchdog potentially levying a fine against the chip producer of up to $2 billion.




Expected to take place on Wednesday, the Financial Times reports the European Commission will issue a ruling declaring Qualcomm to have hurt competition and innovation in its dealings with Apple. The dealings are alleged to include Qualcomm paying Apple to be the exclusive vendor of communications chipsets for iPhones, which report sources say took place between 2011 and 2016.

The move effectively excluded all other chipset vendors offering similar components that could have been used by Apple. In 2016, Apple started to use Intel-supplied modems in the iPhone 7 and iPhone 7 Plus, while a report in October suggested Apple was seriously considering eliminating Qualcomm's modems from future iPhones entirely.

Under EU rules, fines are capped at a maximum of 10 percent of annual turnover, which if used would cost Qualcomm in the region of $2 billion. As the European Commission is allegedly seeking to use the fine to punish Qualcomm and act as a deterrent for future offenses, it may elect to go close to the maximum allowable penalty.

The investigation into Qualcomm's deal with Apple commenced in June 2015, with the Commission issuing a charge sheet over the matter five months later. On issuing the charges, European competition commissioner Margrethe Vestager expressed concern that "Qualcomm's actions may have pushed out competitors or prevented them from competing.

This is not the only investigation the European Commission is conducting into Qualcomm, as it is still looking into the chip firm's actions between 2009 and 2011, when Qualcomm produced a chipset to two of its customers at below cost. It is claimed this activity was aimed at forcing the rival Icera out of the market, a firm based in the UK that was acquired by Nvidia in May 2011 and shuttered four years later.

The ruling could have an impact on Qualcomm in a number of areas, including its ongoing and various lawsuits against Apple, giving the iPhone producer more ammunition in court. The list includes a $1 billion suit from Apple claiming unpaid rebates withheld over Apple's part in an antitrust investigation, a countersuit from Qualcomm citing breach of contract, requests by Qualcomm to the U.S. International Trade Commission to block iPhone and iPad imports, and patent infringement suits in Germany and China.

In November, Qualcomm revealed the toll its lawsuits and fines, as well as actions such as Apple withholding royalty payments, had on its finances. For the fourth quarter, Qualcomm's net income dropped year-on-year from $1.6 billion to just $168 million, with the firm claiming its earnings "were negatively impacted as a result of actions taken by Apple and its contract manufacturers."

Qualcomm has already been fined $773 million by Taiwan's Fair Trade Commission, which found the company guilty of anti-trust and monopolistic tactics. According to Focus Taiwan, Qualcomm recently applied to pay the fine in installments, with the FTC confirming t will review the application in the near future.
h2p

Comments

  • Reply 1 of 19
    sflocalsflocal Posts: 4,651member
    Crossing fingers that Qualcomm gets the hammer dropped hard on it.  They deserve everything bad coming their way.
    netmageJWSCtmaymagman1979tycho_macusergregg thurmanGeorgeBMacronnjony0
  • Reply 2 of 19
    lkrupplkrupp Posts: 7,146member
    sflocal said:
    Crossing fingers that Qualcomm gets the hammer dropped hard on it.  They deserve everything bad coming their way.
    As does Apple?
  • Reply 3 of 19
    rob53rob53 Posts: 2,042member
    Guess this is the new income stream for the EU. Looks like they’re following the patent troll playbook. Qualcomm needs to be fined but how many countries are going to jump on the bandwagon? 

    Might need to investigate BMW’s rediculous charging for CarPlay but why fine one of your own. 
    viclauyyc
  • Reply 4 of 19
    JWSCJWSC Posts: 444member

    As much as I dislike Qualcomm, I’m trying to understand what EU law they violated.  Certainly, their behavior was anticompetitive and gave Apple an unfair price advantage for their paid for ‘loyalty.’

    But I think merely being anticompetitive is not enough to warrant the EU’s attention.  Is it not anticompetitive when you offer a product at a lower price than competitors?  Yes, but no laws are broken and it is normal marketplace practice to compete on price.  Is it not unfair when you can get a better price from a supplier when you bargain harder than your competitors?  Yes, but it is also normal marketplace behavior to try to get the best bargain to reduce unit costs and increase profits.

    So again, what laws did Qualcomm brake?  Or was it just bad optics and political opportunism that motivate EU attention?

  • Reply 5 of 19
    rob53 said:
    Guess this is the new income stream for the EU. Looks like they’re following the patent troll playbook. Qualcomm needs to be fined but how many countries are going to jump on the bandwagon? 

    Might need to investigate BMW’s rediculous charging for CarPlay but why fine one of your own. 
    You mean like the EUR880M fine it handed to Scania recently?
    [Deleted User]ronn
  • Reply 6 of 19
    foggyhillfoggyhill Posts: 4,767member
    JWSC said:

    As much as I dislike Qualcomm, I’m trying to understand what EU law they violated.  Certainly, their behavior was anticompetitive and gave Apple an unfair price advantage for their paid for ‘loyalty.’

    But I think merely being anticompetitive is not enough to warrant the EU’s attention.  Is it not anticompetitive when you offer a product at a lower price than competitors?  Yes, but no laws are broken and it is normal marketplace practice to compete on price.  Is it not unfair when you can get a better price from a supplier when you bargain harder than your competitors?  Yes, but it is also normal marketplace behavior to try to get the best bargain to reduce unit costs and increase profits.

    So again, what laws did Qualcomm brake?  Or was it just bad optics and political opportunism that motivate EU attention?

    There are many anti-trust laws in the EU and Qualcomm is certainly in a quasi monopoly position with regards to the communication chips
    GeorgeBMacronn
  • Reply 7 of 19
    lukeilukei Posts: 332member
    The EU has a 60 Billion Euro pension deficit. 

    They are working hard to address that...
    viclauyyc
  • Reply 8 of 19
    JWSCJWSC Posts: 444member
    foggyhill said:

    There are many anti-trust laws in the EU and Qualcomm is certainly in a quasi monopoly position with regards to the communication chips
    I’m no lawyer on either side of the Atlantic.  But I do know that in the US merely being a monopoly is not against the law.  Abusing that monopoly power is.  Don’t know about the EU.  And I don’t understand enough about the case against Qualcomm to be a particularly good judge.

    Regardless of the nature of any particular law, I am more than happy to see laws enforced equally and fairly.  If Qualcomm did violate EU law then go get ‘em!  But the sometimes capricious doings of the EU (cough, Irish taxes, cough) make me uncomfortable and unsure that they are doing the right thing for the right reasons.
  • Reply 9 of 19
    lkrupp said:
    sflocal said:
    Crossing fingers that Qualcomm gets the hammer dropped hard on it.  They deserve everything bad coming their way.
    As does Apple?
    Did you have anything intelligent to add, or are you just baiting people? As do you???
    magman1979tycho_macusermuthuk_vanalingammwhitekuduGeorgeBMacronn
  • Reply 10 of 19
    avon b7avon b7 Posts: 3,902member
    JWSC said:
    foggyhill said:

    There are many anti-trust laws in the EU and Qualcomm is certainly in a quasi monopoly position with regards to the communication chips
    I’m no lawyer on either side of the Atlantic.  But I do know that in the US merely being a monopoly is not against the law.  Abusing that monopoly power is.  Don’t know about the EU.  And I don’t understand enough about the case against Qualcomm to be a particularly good judge.

    Regardless of the nature of any particular law, I am more than happy to see laws enforced equally and fairly.  If Qualcomm did violate EU law then go get ‘em!  But the sometimes capricious doings of the EU (cough, Irish taxes, cough) make me uncomfortable and unsure that they are doing the right thing for the right reasons.
    There is some information here:

    http://ec.europa.eu/competition/antitrust/overview_en.html
    georgie01muthuk_vanalingam
  • Reply 11 of 19
    JWSC said:

    As much as I dislike Qualcomm, I’m trying to understand what EU law they violated.  Certainly, their behavior was anticompetitive and gave Apple an unfair price advantage for their paid for ‘loyalty.’

    But I think merely being anticompetitive is not enough to warrant the EU’s attention.  Is it not anticompetitive when you offer a product at a lower price than competitors?  Yes, but no laws are broken and it is normal marketplace practice to compete on price.  Is it not unfair when you can get a better price from a supplier when you bargain harder than your competitors?  Yes, but it is also normal marketplace behavior to try to get the best bargain to reduce unit costs and increase profits.

    So again, what laws did Qualcomm brake?  Or was it just bad optics and political opportunism that motivate EU attention?

    In the US at least, if you dump products below cost that can be abuse of monopoly power, and is against the law. This was mentioned in the article. Also, if you go beyond negotiating for best price and pay a customer to not use a competitor's products regardless of the price or quality of competing products, that would also be against anti-trust law. Microsoft was found guilty of something similar in the US, when they essentially forced computer manufacturers to pay for a copy of Windows on every computer that was manufactured, whether or not it even got installed, in order to qualify for best pricing of Windows. That prevented most manufacturers from offering Linux as a choice, at least off the shelf, and gave customers little reason to not use Windows.
    GeorgeBMacronn
  • Reply 12 of 19
    fallenjtfallenjt Posts: 3,976member
    rob53 said:
    Guess this is the new income stream for the EU. Looks like they’re following the patent troll playbook. Qualcomm needs to be fined but how many countries are going to jump on the bandwagon? 

    Might need to investigate BMW’s rediculous charging for CarPlay but why fine one of your own. 
    Ridiculous charging for CarPlay? WTF! Are you expecting them to give you CarPlay for free? Does Microsoft give you Windows for free or charge you fee to unlock the features? Other car manufactures decide to include CarPlay cost in the price of vehicle instead of an option, but why would anyone want to pay for something they do not use, for example Android users?
    BMW decide to factory install the CarPlay hardware in every new vehicle and allow to activate it thru software instead of retrofitting the hardware after the car is built because it's more expensive to retrofit any BMW option. I don't see BMW does anything wrong with it.
  • Reply 13 of 19
    lkrupp said:
    sflocal said:
    Crossing fingers that Qualcomm gets the hammer dropped hard on it.  They deserve everything bad coming their way.
    As does Apple?
    No
    ronn
  • Reply 14 of 19
    MplsPMplsP Posts: 1,437member
    fallenjt said:
    rob53 said:
    Guess this is the new income stream for the EU. Looks like they’re following the patent troll playbook. Qualcomm needs to be fined but how many countries are going to jump on the bandwagon? 

    Might need to investigate BMW’s rediculous charging for CarPlay but why fine one of your own. 
    Ridiculous charging for CarPlay? WTF! Are you expecting them to give you CarPlay for free? Does Microsoft give you Windows for free or charge you fee to unlock the features? Other car manufactures decide to include CarPlay cost in the price of vehicle instead of an option, but why would anyone want to pay for something they do not use, for example Android users?
    BMW decide to factory install the CarPlay hardware in every new vehicle and allow to activate it thru software instead of retrofitting the hardware after the car is built because it's more expensive to retrofit any BMW option. I don't see BMW does anything wrong with it.
    After paying $50,000+ for a car, yes, I expect it to be included, and not be dinged on a yearly basis for something every other carmaker includes in the price of the car
    JWSCronn
  • Reply 15 of 19
    croprcropr Posts: 943member
    lukei said:
    The EU has a 60 Billion Euro pension deficit. 

    They are working hard to address that...
    Pensions are regulated by the member states of the EU, not by the EU itself. Any fine imposed by the EU commission cannot help the member states to finance their pension plans.
    GeorgeBMacronn
  • Reply 16 of 19
    JWSC said:

    As much as I dislike Qualcomm, I’m trying to understand what EU law they violated.  Certainly, their behavior was anticompetitive and gave Apple an unfair price advantage for their paid for ‘loyalty.’

    But I think merely being anticompetitive is not enough to warrant the EU’s attention.  Is it not anticompetitive when you offer a product at a lower price than competitors?  Yes, but no laws are broken and it is normal marketplace practice to compete on price.  Is it not unfair when you can get a better price from a supplier when you bargain harder than your competitors?  Yes, but it is also normal marketplace behavior to try to get the best bargain to reduce unit costs and increase profits.

    So again, what laws did Qualcomm brake?  Or was it just bad optics and political opportunism that motivate EU attention?

    The key is think outside of the American way of life; US ≠ Rest of the World. The business model ingrained in the American mind is different to that in Europe or Asia for example and often will clash, it doesn't mean one is wrong or right, but companies that compete globally have to adhere to the laws in each market and not just their home country.
  • Reply 17 of 19
    adm1 said:
    JWSC said:

    As much as I dislike Qualcomm, I’m trying to understand what EU law they violated.  Certainly, their behavior was anticompetitive and gave Apple an unfair price advantage for their paid for ‘loyalty.’

    But I think merely being anticompetitive is not enough to warrant the EU’s attention.  Is it not anticompetitive when you offer a product at a lower price than competitors?  Yes, but no laws are broken and it is normal marketplace practice to compete on price.  Is it not unfair when you can get a better price from a supplier when you bargain harder than your competitors?  Yes, but it is also normal marketplace behavior to try to get the best bargain to reduce unit costs and increase profits.

    So again, what laws did Qualcomm brake?  Or was it just bad optics and political opportunism that motivate EU attention?

    The key is think outside of the American way of life; US ≠ Rest of the World. The business model ingrained in the American mind is different to that in Europe or Asia for example and often will clash, it doesn't mean one is wrong or right, but companies that compete globally have to adhere to the laws in each market and not just their home country.
    But which EU country make cellphones or the chip? Is the monopoly damaged their profit or chance to survive?
  • Reply 18 of 19
    viclauyyc said:
    But which EU country make cellphones or the chip? Is the monopoly damaged their profit or chance to survive?
    Enough chipmakers delivering components. However that is not the issue, it is all about protecting the customer. Competition is good for the customer.  Unfair monopoly practice could lead to high prices, cartel etc.
    ronn
  • Reply 19 of 19
    viclauyyc said:
    adm1 said:
    JWSC said:

    As much as I dislike Qualcomm, I’m trying to understand what EU law they violated.  Certainly, their behavior was anticompetitive and gave Apple an unfair price advantage for their paid for ‘loyalty.’

    But I think merely being anticompetitive is not enough to warrant the EU’s attention.  Is it not anticompetitive when you offer a product at a lower price than competitors?  Yes, but no laws are broken and it is normal marketplace practice to compete on price.  Is it not unfair when you can get a better price from a supplier when you bargain harder than your competitors?  Yes, but it is also normal marketplace behavior to try to get the best bargain to reduce unit costs and increase profits.

    So again, what laws did Qualcomm brake?  Or was it just bad optics and political opportunism that motivate EU attention?

    The key is think outside of the American way of life; US ≠ Rest of the World. The business model ingrained in the American mind is different to that in Europe or Asia for example and often will clash, it doesn't mean one is wrong or right, but companies that compete globally have to adhere to the laws in each market and not just their home country.
    But which EU country make cellphones or the chip? Is the monopoly damaged their profit or chance to survive?


    Ericsson is forced to withdraw from market in that time frame...

    consumers, higher prices?

    ronn
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