Taiwan Trade Commission Fines Qualcomm $773 Million

The Taiwan Federal Trade Commission or TFTC announced that it is fining Qualcomm for violating competition law in the mobile standard base and chip market. The fine is for NT$23.4 billion equal to $773 million.

The decision made by the TFTC said that Qualcomm used its standard essential patents or SEPs, for LTE, WCDMA and CDMA mobile technologies, to force its rivals into agreeing to different contractual clauses that in effect drove prices up and maintained its dominance across the mobile phone market in China.

In the decision made by the TFTC, the commission said that Qualcomm had refused to provide its baseband chips, if makers of mobile phones did not previously sign contracts related to patent authorization, which led to the phone makers needing to accept the terms made by Qualcomm that give it more benefits.

In addition, the commission said that Qualcomm offered major dealers exclusive transactions that provided special offers on the patent royalties that causes rivals to lose opportunities to make deals or being at a disadvantage.

The fine was based on two sections in the Fair Trading Act and the commission point to how severe the breach of the law was, having lasted seven years and Qualcomm having taken in close to NT$400 billion over the period.

Along with being fined, Qualcomm was asked to end the use of clauses with its contract that require certain information of a sensitive nature from its competitors on prices of chips, sales volume, sales targets, and product models; other clauses that refuse to give chips to mobile phone makers; and any clauses that mandate an exclusive trading concession with certain businesses.

The U.S. based company must notify competitors as well as phone makers in less than 30 days of these changes, with new contract for patent authorization being drawn up.

Qualcomm is also required to report every six months to the TFTC on the negotiations it holds with makers of mobile phones.

Qualcomm, in response to the TFTC fine, said it would be appealing the commission’s decision in Taiwan courts after the formal decision of the TFTC is published sometime over the next few weeks.

The global competitive practices of Qualcomm have come under heavy fire several times; in February of 2016 the antitrust regulator in China required Qualcomm to pay a fine of $975 million and reduce royalty rates on its patents in the mobile phone market in China, to end an investigation of 14 months into it practices of patent licensing.

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