EU picks up Qualcomm investigation

Qualcomm is in the hot seat once again. The European Commission announced today that it has begun an antitrust investigation into Qualcomm for alleged exploitative practices in the market for mobile phone chipsets. After two years of apparent inactivity, the commission has elevated its probe of the chipmaker’s business practice to “a priority” and conducting an in-depth investigation into the matter.

The investigation centers on allegations that Qualcomm, the world's second-largest chipmaker for cell phones, violated EU competition rules by using its CDMA intellectual property as unfair leverage against competitors and partners. The six companies that filed the original complaint with the commission--Nokia, Ericsson, Texas Instruments, Broadcom, Panasonic and NEC--claimed Qualcomm abused its dominant market position to force cell phone makers to use its chips in phones based on CDMA and W-CDMA technology.

In a prepared statement, the six companies said Qualcomm’s practices are harmful to the mobile telecom industry globally in that they undermine confidence in standard-setting processes, threaten the supply of WCDMA chipset, impede innovation and raise the costs of third-generation technology and handsets, leading to higher prices and fewer choices for both carriers and consumers.

However, Qualcomm retorted that its licensing model allowed new vendors to enter the market, leading to a greater variety of products and declining handset prices. In a prepared statement, Steve Altman, president of Qualcomm, said that competitors are using the complaints to “stifle” the competition his company brings to the market, and that Qualcomm will use the investigation “to demonstrate that the complaints are without merit and are motivated by commercial considerations.”

There is no set timetable for completion of its investigation, but the commission said the probe has been upgraded to “priority status” to ensure it would be completed as soon as possible, adding that this decision does not imply that the commission has conclusive proof of an infringement. If the commission finds the company guilty, it could force Qualcomm to change its licensing practices and fine it as much as 10% of its annual revenue.