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European Union abandons antitrust probe into Qualcomm
Published: 24 November, 2009
Tags >> Europe | Qualcomm | CDMA | UMTS
The European Union has lifted the threat of antitrust action against Qualcomm, a danger that CEO Paul Jacobs once admitted could lead to the break-up of the silicon/licensing giant. The EU has dropped its two-year investigation into Qualcomm's business practises and all the companies that originally brought the complaint - Broadcom, NEC, Nokia, Ericsson, Panasonic and Texas Instruments - are now withdrawing their allegations.
After the dark days of the summer, when Qualcomm was hit by antitrust fines in both Korea and Japan, its fortunes have improved dramatically on the licensing side. First it announced it had signed up the big three handset makers for 3G and 4G patent licenses, and now the biggest risk to its existing royalties model and market position has been lifted. It may not hold the same sway in emerging OFDMA technologies as in CDMA-based systems - though it is thought to have about 24% of essential patents - but at least it will not be faced with a long and potentially expensive EU trial, in the style of Microsoft or Intel.
The European Commission said it had to "focus its priorities elsewhere". It initiated its probe in 2007 after the six firms brought complaints that Qualcomm broke agreements among patent holders to keep costs at reasonable levels, and was abusing a monopoly position in 3G IPR.
Two factors made it less likely that it would pursue the investigations to trial - Qualcomm's truces with two of the complainants, Nokia and Broadcom; and the likely departure of competition commissioner Nellie Kroes, who has taken a very hardline approach to technology antitrust, early next year, when the EC appoints new personnel. Kroes had reportedly wanted to pursue further action, but was opposed by many of her officials, who felt the case was too weak, and that the issue was not Qualcomm specific, but a more general problem of the level of charging for 3G technologies.
An EC spokesperson said the body was "still concerned" about how 3G technology was priced but could not commit the time or resources to "complex" assessments. "Any antitrust enforcer has to be careful about overturning commercial agreements," it said in a statement. "The Commission does not consider it appropriate to invest further resources in this case."
In further good news for Qualcomm, research firm iSuppli believes it will improve its position in the global semiconductor league table for 2009, from eighth to sixth place. This is partly because of the poor performance of some other players during the downturn, in a year when the sector's revenue fell by 12.4% (which at least was better than the 20% drop forecast a year ago). Even Qualcomm was in negative growth - indeed, only Samsung, among the top 10, achieved growth, and only 27 of the top 135 are expected to see increased revenue for 2009.
Samsung is expected to see 1.3% growth for this year, mainly because of its dominance of the memory market, which outperformed the overall chip industry - its leadership in DRAM and NAND Flash memories helped it keep its number two position after Intel. Qualcomm is predicted to report flat revenues, making it the second best performer in the top 10 after Samsung, mainly because it stole significant market share in cellphone chips from rivals.
