The term of the Juncker Commission is nearing its end, and while I'm far from enthusiastic about his successor, I'm relieved that neither that conservative-in-name-only Weber nor "Poor Man's Bernie" (Timmermans, who's less reasonable than the real Senator Sanders) got the top job. However, my preference among reasonably likely candidates would have been Margrethe Vestager, the EU's competition commissioner, as I made clear on social media, despite disagreeing with some parts of her regulatory activism, such as the "state aid" case against Ireland and certain aspects of the Android case.
Last year I wrote that Qualcomm "won" the "Antitrust Grand Slam" when the European Commission joined the U.S. Federal Trade Commission and a couple of Asian regulators in fining Qualcomm. The Commission imposed a fine of €997 million ($1.2 billion) over exclusionary conduct in the years 2011-2016 when Apple was precluded from sourcing baseband chipsets from Qualcomm's competitors such as Intel. That exclusive dealing is one of the four counts on which the U.S. FTC defeated Qualcomm in court this year (my previous post discussed some support Qualcomm got for its motion for an enforcement stay).
Yesterday's fine, based on a supplemental Statement of Objections that came down in July 2018, amounts to "only" 242 million euros (272 million U.S. dollars), so it now got a "double whammy" from the EU. The latest one is about predatory pricing. At first sight, that's counterintuitive. We all know that the allegations usually brought against Qualcomm, besides exclusive dealing, are all about maximizing revenues even in the very short term, not just for the long haul. However, we have to keep in mind that Qualcomm is not just "a monopoly" (in the sense of U.S. antitrust law; over in the EU, this is called "market dominance"), but a dual monopoly: its SEP portfolio bestows monopolistic rights (not only on Qualcomm but also on any other patent holder, provided at least one patent in a portfolio is truly standard-essential), as does its position in certain segments of the chip market, and those monopolies are mutually-reinforcing as a result of Qualcomm's practices.
So even if Qualcomm (now quoting an EU Commission statement) "sold certain quantities of three of its UMTS chipsets below cost to Huawei and ZTE, two strategically important customers, with the intention of eliminating Icera, its main rival at the time in the market segment offering advanced data rate performance," it doesn't mean that phones became cheaper or that Qualcomm lost money on those devices in the short term. Much to the contrary, we can assume that Qualcomm was able to easily afford price dumping on those low-end chipsets because it would impose its patent tax on those devices anyway (even if those device makers had used non-Qualcomm chips).
Having said that, the second EU antitrust fine imposed on Qualcomm during Mrs. Vestager's first term is perfectly consistent with findings by various antitrust regulators around the globe, and with Judge Koh's landmark ruling.
Share with other professionals via LinkedIn: