Commission fines Qualcomm €242 million for predation

On 18 July 2019, the European Commission ('Commission') fined Qualcomm €242 million for predation in the market for 3G broadband chipsets from 2009 to 2011, aimed at eliminating its rival Icera.

On 18 July 2019, the Commission fined Qualcomm €242 million for predatory pricing in the global market for 3G (UMTS) baseband chipsets, which allow mobile phones and tablets to connect to cellular networks. The Commission found that the company enjoyed a dominant position on that market, having a market share of around 60%, over three times its closest competitor. According to the Commission, Qualcomm had abused that position by selling the chipsets below cost to ZTE and Huawei between 2009 and 2011, with the aim of preventing its main rival, the UK chipmaker Icera, from further expanding its position.

The Commission has indicated that it based its findings on a combination of a price-cost test and a "broad range of qualitative evidence demonstrating the anti-competitive rationale behind Qualcomm's conduct". Qualcomm has announced that it will be appealing the decision, which it considers to be "based on a novel theory of alleged below-cost pricing over a very short time period and for a very small volume of chips".

In January 2018, the Commission already imposed a fine of almost €1 billion on Qualcomm for exclusionary practices on the market for LTE baseband chipsets.

The procedure in this case has been long even by Commission standards. Icera initially filed its complaint almost a decade ago in 2010. Since then it has been acquired by Nvidia and the chipset business was closed down in 2015. The last decade has also seen a challenge by Qualcomm against the invasiveness of the Commission's investigation come and go, rejected by the EU General Court ('GC') earlier this year (T-371/17). Qualcomm appealed against that judgment before the Court of Justice last month (C-466/19 P). 

This is the first time the Commission has fined a company for predatory pricing since the Wanadoo decision in 2003. It will thus give the EU Courts the first opportunity in many years to refine (or not) the legal test for predation, an alchemic blend of cost analysis and exclusionary intent.