Monday, September 23, 2019
S. Korea's Trade Watchdog Cuts Fine on Qualcomm after Decade-old Legal Battle
In Compliance with a Court Ruling
S. Korea's Trade Watchdog Cuts Fine on Qualcomm after Decade-old Legal Battle
  • By Michael Herh
  • March 22, 2019, 10:08
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The Fair Trade Commission (FTC) has canceled 48.60 billion won (US$43.05 million) out of a fine of 273.20 billion won (US$241.98 million) imposed on Qualcomm in 2009.

South Korea's antitrust regulator has decided to end a decade-old legal battle with Qualcomm Inc., a U.S. mobile chip producer, and re-impose a fine on the firm in compliance with a court ruling.


The Fair Trade Commission (FTC) announced on March 21 that it has canceled 48.60 billion won (US$43.05 million) out of a fine of 273.20 billion won (US$241.98 million) it previously levied on Qualcomm in 2009. Accordingly, the penalty for the case in 2009 is now reduced to 224.50 billion won (US$198.85 million).


Previously, the chipmaker was fined 273.20 billion won (US$241.98 million) by the FTC for allegedly forcing domestic handset manufacturers, such as Samsung Electronics Co., LG Electronics Inc. and Pantech Co., to use its code division multiple access (CDMA) technology and asking for more royalties between 2000 and 2009 when they used its competitors’ modem chips.

Qualcomm reacted to the FTC’s decision and filed an administrative lawsuit in February 2010. After nine years of the lawsuit, the Supreme Court accepted most of the FTC’s decision on injustice of the conditional rebates for modem chips and the fine. However, it ruled in favor of Qualcomm regarding the rebates for radio frequency (RF) chips. The Supreme Court said it could not say that the so-called “market blockade effect” occurred during a certain period when Qualcomm offered exclusive rebates to LG Electronics.


In addition to the cancellation of part of the original penalty, the FTC specified the CDMA2000 RF chip as the “component” for the corrective orders issued to Qualcomm related to the reduction of royalties and canceled the correctionorder for Qualcomm’s Korean branch office, except for its headquarters.


An official from the FTC said, “The recent ruling of the Supreme Court promotes awareness that amonopolisticenterprise is not allowed to abuseitsmarketdominance to rule out its competitors. In particular, it is meaningful in that the Supreme Court accepted illegitimacy of act of removing competition through conditional rebates in a technology-intensive industry.”


In a separate case, the FTC imposed a 1.03 trillion won (US$912.31 million) fine on Qualcomm in 2016 for what it called unfair business practices in supplying wireless communication chips to Korean companies. Qualcomm filed a lawsuit in February 2017 and the case is being tried.