Qualcomm had hard times these days. On 17 July the European Commission issued a press release in which it reported that it had fined the chip maker at a whopping 242 million euros. According to EC, a fine was imposed as a result of the fact that Qualcomm has for a long period gave their 3G modems for next to nothing just in order to oust competitors from the market.
Qualcomm just did not leave to their competitors a choice
According to EU Commissioner, Margret Vestager:
Modems are key components of mobile devices through which they can connect to the Internet. Qualcomm sold these chips at a price below the cost of key customers with the aim of eliminating its main competitor. This behavior Qualcomm has prevented competition and innovation in this market and limited the choice available to consumers in the sector with a huge demand and potential for innovative technologies. In compliance with the antitrust rules of the EU it is illegal today, we fined Qualcomm to 242 million euros.
In the period from 2009 to 2011, the share of Qualcomm in the niche of 3G modems on the world market was about 60%. Not only that, 60% is in itself a large number, but it is also about three times more than the market share owned by the largest competitor of Qualcomm at the time.
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In continuation to the press release, the EU stated:
Market dominance itself is not illegal under the antitrust rules of the EU. However, dominant companies have a special responsibility not to abuse its leading position on the market, restricting competition either on the domestic market, where they dominate, or in specific markets.
It would seem that a huge penalty to 242 000 000 euros, but for Qualcomm it is not catastrophic
Although a dominant market position is not illegal, it is reported that Qualcomm used “predatory pricing” for those 2009 and 2011. In particular, the EU notes that the company sold the modems as Huawei and ZTE below cost to absorb an even greater share of the market and to sell its chips at prices that its competitors simply could not afford.
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A fine in the amount of 242 million euros is, of course, a lot, but compared with the turnover Qualcomm in 2018 he is only 1.27 per cent.
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