Qualcomm loses in CJEU over antitrust investigations by EU

Recently, the Court of Justice of the European Union (CJEU) came across a case against Qualcomm that will strengthen its hand in anti-trust investigations. However, Europe’s top court decided against the company reaffirming the exercise of the right to investigate EU anti-trust regulators right to investigate against an American multinational corporation. The company has already been levied a whopping fine of 242-million-euro which is equivalent to $292.60 million.

Qualcomm is having its headquarters in San Diego, California, and incorporated in Delaware. It is famous for creating intellectual property, semi-conductors, software, and services related to wireless technology. It owns a large number of patents critical to the CDMA2000, TD-SCDMA, and WCDMA mobile communications standards.

Qualcomm was established in the year of 1985 by Irwin M. Jacobs along with six other co-founders. It started its early research into CDMA wireless cell phone technology which was funded by selling satellite communications systems for commercial trucks. Qualcomm gave its contribution to the adoption of 3G standards after facing a heated debate in the wireless industry on this topic. However, it was adopted when Qualcomm’s CDMA patents were incorporated. Its struggle didn’t stop here only; it had to face many legal disputes later about pricing for licensing patents which were required by the standard.

The Commission has already fined Qualcomm with the amount of 1.2 billion Euros in two cases in the period of three years for using its dominance and power in the market to thwart rivals including Intel.

Now let’s delve into some history of this case. Initially, the EU asked Qualcomm to provide more information on how it carries on its business. However, the EU had officially launched two antitrust investigations against the company in the month of July 2015. These lawsuits were filed with the aim to assess one major fact whether the chipmaker abuses its dominant market position to force consumers to use its chips. Later the EU formally accused the company in the month of December of 2015, of using its dominant position in the mobile phone chip market to suppress competitors.

It was in an ongoing investigation when the EU asked Qualcomm to provide more relevant information. However, the company subsequently appealed against the EU’s request. It requested the Court to reject the EU’s request to provide information in its appeal. Qualcomm stated in its appeal, “The time which would be consumed in collecting the data required by the EU would cost at least 3 million euros. The whole process will further cost thousands of hours of work by fifty employees and sixteen external consultants.” Qualcomm further added, “The request exceeded the investigation’s scope. We also approached the General Court which is Europe’s second-highest court but lost our challenge in 2019.”

It was in April 2019 when the EU Intermediate Court rejected Qualcomm’s appeal and further, the EU Court of Justice again chose to reject Qualcomm’s appeal on 28th January 2021.

Just one month after the incident of Qualcomm filing an appeal, the European Commission announced its decision in July 2019 of imposing a fine of 242 million euros which is approximately $293 million on the company over Qualcomm’s predatory behavior between the periods starting from 2009 to 2011. The reason behind such EU’s decision to levying a fine was the price manipulation which resulted in the forced withdrawal of competitors from the market.

Qualcomm also said, “The European Commission spent several years investigating our sales to two customers, but each customer said that they favor Qualcomm chips, not because of the price, but because the competitors’ chipsets are technically inferior”.

After all this, the company finally decided to appeal to the CJEU. The CJEU decided to support the EU antitrust watchdog and ruled, “Having regard to the broad powers of investigation conferred on the Commission by Regulation №1/2003, it is for the Commission to decide whether a particular item of information is necessary to enable it to bring to light an infringement of the competition rules”.

It is to be noted that this particular case is the third case against Qualcomm in which EU regulators are investigating on the fact whether the company engaged in anti-competitive behavior by way of leveraging its market position in 5G modem chips in the radio frequency chip market.