The European Commission has announced it will slap Apple chip-manufacturer Qualcomm with a staggering $1.2 billion fine (€997 million) “for abuse of dominant market position.”
EU Commissioner for Competition Margrethe Vestager announced the punishment at a press conference in Brussels this morning.
“The European Commission has fined Qualcomm €997m for abusing its market dominance in LTE baseband chipsets,”the Commission said in a press release. “Qualcomm prevented rivals from competing in the market by making significant payments to a key customer on condition it would not buy from rivals. This is illegal under EU antitrust rules.”
The fine, which represents 4.9 percent of Qualcomm’s turnover in 2017, takes account of the duration and gravity of the infringement. The Commission further noted the severe punishment should be considered a warning sign for any entities engaging in similar anti-competitive practices in the future.
According to the filing, Qualcomm’s agreement with Apple stipulated that the chip-maker would make “significant payments” to Apple so long as the iPhone-maker continues to favor
“Qualcomm illegally shut out rivals from the market for LTE baseband chipsets for over five years, thereby cementing its market dominance,” Verstager revealed during the press conference. ”
“Qualcomm paid billions of US Dollars to a key customer, Apple, so that it would not buy from rivals,” she continued. “These payments were not just reductions in price – they were made on the condition that Apple would exclusively use Qualcomm’s baseband chipsets in all its iPhones and iPads.”
“This meant that no rival could effectively challenge Qualcomm in this market, no matter how good their products were. Qualcomm’s behaviour denied consumers and other companies more choice and innovation – and this in a sector with a huge demand and potential for innovative technologies,” she added.
“This is illegal under EU antitrust rules and why we have taken today’s decision.”
The European Commission has remained vigilant in its pursuit of anti-competitive practices.
Indeed, last year the Commission fined Google with a massive €2.4 billion fine for allegedly abusing its dominance as a search engine provider to give illegal advantage to its own shopping services.