EU fines Qualcomm $1.2 billion over Apple payments

by Harper Neidig - 01/24/18 11:26 AM ET

The European Union on Wednesday fined chipmaker Qualcomm $1.2 billion for paying Apple not to purchase components from its competitors.

Margrethe Vestager, the EU’s competition commissioner, said the arrangement gave Qualcomm dominance in the market for LTE baseband chips.

“Qualcomm paid billions of US Dollars to a key customer, Apple, so that it would not buy from rivals,” Vestager said in a statement. “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.”

Qualcomm has already promised to appeal the decision.

{mosads}“We are confident this agreement did not violate EU competition rules or adversely affect market competition or European consumers,” Don Rosenburg, the company’s general counsel, said in a statement.

Vestager said that while the agreement was in place between 2011 and 2016, Apple decided against changing to a different supplier, Qualcomm’s chief rival Intel, because of the exclusivity provision. After the agreement expired, Apple began buying some components from Intel. The EU said that Qualcomm violated its antitrust laws by using its market dominance to preclude competition over Apple’s business.

The fine is the latest crackdown from Vestager on a U.S. tech company. Last year, she hit Google with a record $2.9 billion antitrust fine for favoring its own services in its search results, and she’s forcing Apple to pay Ireland more than $15 billion in back taxes after concluding that the country had offered illegal tax breaks to attract the iPhone maker.

It also comes as Qualcomm is fighting off a hostile takeover from Broadcom and lawsuits from the Federal Trade Commission and Apple, which alleges that Qualcomm violated a contract.

Updated at 11:50 a.m.

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