Qualcomm Faces Fine of $865M from South Korean Regulator

Qualcomm officials enter a courtroom of the Fair Trade Commission in Sejong central South Korea on Dec. 28 2016
Qualcomm officials enter a courtroom of the Fair Trade Commission in Sejong central South Korea on Dec. 28 2016
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29 December, 2016

Qualcomm faces the largest antitrust fine in South Korean history, following a almost three-year investigation from the South Korean Fair Trade Commission.

The South Korean regulator said that many of Qualcomm's business practices are in violation of the Korean competitive law, including those related to patent licensing and modem chip sales.

Qualcomm also says their licensing deals have existed in South Korea, and all over the world, for decades.

KFTC Secretary General Shin Young-son told a media briefing in Seoul that the ruling was not about protecting domestics companies such as LG Electronics Co. and Samsung but about improving market competition for all players.

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"Qualcomm has taken a contradictory stance, as it received comprehensive licenses from handset companies but never offered its rights to its chip rivals".

"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", comments Qualcomm Executive Vice President and General Counsel - Don Rosenberg.

Qualcomm is facing similar antitrust concerns in a number of other countries including the US and Taiwan. This is a major setback for Qualcomm's most profitable business of licensing wireless patents to the mobile industry. The previous record fine to be ever imposed by the FTC was 668.9 billion won on six liquid petroleum gas suppliers for price fixing activity in April 2010. Qualcomm, along with other mobile telecommunication companies - Ericsson (ERIC - Free Report), Huawei Technologies Co. $852.9 million for alleged antitrust law violations as the USA chip maker faces global scrutiny over its patent-licensing business. This recent ruling won't go into effect until the commission issues a formal written order, which is said to take anywhere from weeks to months to put together. "This decision ignores that win-win relationship", he adds. The company will still have to pay the fine within 60 days after the written order comes out, although it will be subject to adjustment or refund based on the appeal. The decision will be challenged in court, the chip maker said later.


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