Qualcomm hit with $773m fine as Taiwan's antitrust watchdog becomes latest to weigh in on FRAND licensing 12 Oct 17
Qualcomm was hit with yet another record-breaking fine by an Asian antitrust body yesterday, as the Taiwan Fair Trade Commission (TFTC) announced its finding that the US chipmaker has abused its monopoly power. The regulator levied a penalty of 23.4 billion New Taiwan Dollars, which totals around $773 million.
In addition to the fine, the statement released by the TFTC (here, in Chinese) indicated that Qualcomm will be ordered to cease the following licensing practices:
- Including provisions in contracts signed with Qualcomm’s competitors demanding that they provide sensitive distribution information (such as prices, buyers, sales amount, model number, etc)
- Including provisions in the components supply contracts signed with mobile phone manufacturers relating to a vertical restraint that chip supply is not allowed without being authorised by Qualcomm
- Including exclusive business discount provisions in the contracts signed with related enterprises
The press release also reveals some interesting details about Qualcomm’s licensing business in the market. The violating licensing practices, it says, occurred over the past seven years. During that time, Qualcomm collected 400 billion New Taiwan Dollars in licensing fees from Taiwanese companies; at today’s exchange rates, that’s around $13.2 billion. During the same span, Taiwan-based manufacturers purchased around $30 billion worth of baseband chips from the US company.
At first blush, the ruling appears to be along similar lines as those handed down previously by China’s National Development and Reform Commission (NDRC) and the Korean Fair Trade Commission (KFTC). “Qualcomm holds big number of standard essential patents in CDMA, WCDMA and LTE segments and is the dominant provider of CDMA, WCDMA and LTE baseband chips,” one translation reported. “It abused its advantage in mobile communication standards, refused to license necessary patents.”
Qualcomm’s global battle to defend its licensing practices from antitrust scrutiny has placed it at loggerheads with many of the biggest names in Taiwanese industry. One of most notable rulings by the KFTC in its Qualcomm probe was that the US company must negotiate licences with competitors including Mediatek – a Taiwanese company that is a fierce rival for mobile chipset sales. Qualcomm’s multijurisdictional legal battle with Apple has also seen four major Taiwanese contract manufacturers – Foxconn, Wistron, Compal and Pegatron – caught in the crossfire, on the receiving end of Qualcomm lawsuits. Seen through this lens, the TFTC’s tough stance isn’t much of a surprise.
Qualcomm says it will ask Taiwanese courts to stay any behavioural remedies and overturn the large fine, which it claims “bears no rational relationship” to its revenues in the market. Its efforts to do the same regarding the KFTC’s $900 million ruling in 2016 have so far been frustrated, but the company announced in September that it was asking the Korea Supreme Court to intervene.
Whatever happens with the appeals, the fact that the TFTC has shown its cards means there is one less major regulatory question mark for Qualcomm in Asia. The focus of the antitrust war may shift to the US and EU going forward, although there is still important Apple-Qualcomm litigation going on in China, Taiwan and Japan.
The IP and antitrust nexus will take centre stage later this month at IPBC Asia. I will be moderating a panel that includes representatives from ZTE, Intel and Conversant IP, as well as distinguished antitrust law professor and attorney Kimitoshi Yabuki.
Thanks to Crystal Chen at Tsai, Lee & Chen in Taipei for providing help with translation.
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