Taiwan’s Federal Trade Commission (TFTC) has announced that it will fine Qualcomm NT$23.4 billion ($773 million) for violating competition law in the mobile communication standard baseband chip market.
According to the TFTC’s decision, Qualcomm used its patents, which are standard essential patents (SEP) for CDMA, WCDMA, and LTE mobile technologies, to force rivals to agree to various contractual clauses that had the effect of driving up prices and maintaining its dominance in the Chinese cell phone market.
“Qualcomm refused to provide baseband chips if cell phone manufactures did not sign the patent authorisation contract, which led to cell phone manufactures — providing the demand of chips — having to accept the terms that had more benefits for Qualcomm,” the TFTC said in its decision.
“Furthermore, Qualcomm offered exclusive transaction to major dealers providing special offers on patent royalties, which led to rivals losing the opportunities of making deals or at disadvantage.
“These behaviors have damaged the competition of baseband chips. It is considered as an unfair approach that directly or indirectly impedes the competition between competitors, which violates Section 9, clause 1 of the Fair Trading Act.”
The fine was calculated under Sections 9 and 15 of the Fair Trading Act, with the TFTC pointing to the “severe” nature of the breach, having lasted for seven years and Qualcomm having obtained around NT$400 billion during the period.
As well as the fine, Qualcomm has been asked to stop including clauses in its contracts that require sensitive information from competitors on chip prices, sales targets, sales volumes, and product models; clauses that refuse to provide chips to cell phone manufacturers; and clauses that mandate exclusive trading concessions with specific businesses.
Qualcomm is required to notify its competitors and phone manufacturers within 30 days of the changes, with new patent…