KFTC fines Qualcomm for antitrust violations

The Korea Fair Trade Commission (KFTC) has imposed sanctions amounting 1.013 trillion (approximately $865 million) won to US-based chipmaker Qualcomm for what it considers anti-competitive patent licensing practices.

According to the ruling, some of Qualcomm’s practices fall under the “abuse of market dominance” category such as restricting the licensing of mobile communication Standard Essential Patents (SEPs), coercing mobile phone makers to sign unfair license agreements, and forcing unilaterally decided to license terms without a fair compensation calculating process.

Qualcomm strongly disagreed with the KFTC that its business practices are in violation of Korean competition law and said in a statement that it will appeal the KFTC’s decision to the Seoul High Court. 

“Qualcomm strongly believes that the KFTC findings are inconsistent with the facts, disregard the economic realities of the marketplace, and misapply fundamental tenets of competition law,” said Don Rosenberg, executive vice president and general counsel, Qualcomm Incorporated, in a news release. 

“Importantly, this decision does not take issue with the value of Qualcomm’s patent portfolio. Qualcomm’s enormous R&D investments in fundamental mobile technologies and its broad-based licensing of those technologies to mobile phone suppliers and others have facilitated the explosive growth of the mobile communications industry in Korea and worldwide, brought immense benefits to consumers and fostered competition at all levels of the mobile ecosystem,” he added.

Qualcomm also said that for decades it has worked for hand in hand with Korean companies to foster the growth of the wireless Internet. 

“The royalties received by Qualcomm for sales of handsets into Korea accounted for less than three percent of total Qualcomm licensing revenue during Qualcomm’s fiscal 2016,” the statement read. “To the extent that the KFTC’s written decision attempts to regulate intellectual property rights granted by other countries or activities outside of Korea, it would be in direct conflict with accepted rules of international law. Qualcomm will vigorously oppose any such attempt and expects to be supported by other countries and companies.”

Meanwhile, the KFTC said by imposing the measures it will have an opportunity to win back the fair competition in the mobile communications industry.