LONDON The European Commission has decided to close formal antitrust proceedings against communications chipmaker and technology licensor Qualcomm Inc. (San Diego, Calif.) concerning an alleged breach of European rules on abuse of a dominant market position.
Following a number of complaints against Qualcomm the European Commission has been investigating whether the royalties that Qualcomm has been charging since its patented technology became part of Europe's 3G standard are unreasonably high. The formal investigation was opened on Oct. 1, 2007 and if the European Union had found against Qualcomm it could have been fined up to 10 percent of its annual revenue.
The commission began probing Qualcomm's patent royalty rates after a 2005 complaint by Nokia, Broadcom, Texas Instruments, Ericsson and two others groups. Nokia and Broadcom withdrew their complaints in 2008 after reaching settlements worth more than $2.5 billion.
It is understood that there had been differences of opinion within the Commission regarding the case, with some advisers arguing there was insufficient evidence to pursue the complaint. However the European Commission has not be afraid of to impose fines, most famously finding Intel Corp. guilty of anticompetitive behavior and slapping a record $1.4 billion fine on the chipmaker in May of this year.
"The Qualcomm case has raised important issues about the pricing of technology after its adoption as part of an industry standard. In practice, such assessments may be very complex, and any antitrust enforcer has to be careful about overturning commercial agreements," the Commission said in a statement.
"All complainants have now withdrawn or indicated their intention to withdraw their complaints, and the Commission has therefore to decide where best to focus its resources and priorities. In view of this, the Commission does not consider it appropriate to invest further resources in this case," it concluded.
Qualcomm has always denied claims that it overcharged for royalties on its chips and technologies.
In August 2009 Japan's Fair Trade Commission accused the company of forcing customers to give up their patent rights. Qualcomm denied that it forces Japanese customers to hand over patent rights for free. Qualcomm was fined about $210 million in July 2009 by South Korea's antitrust agency for deterring competition through unfair fees. Qualcomm is appealing the fine.
Don Rosenberg, executive vice president and general counsel for Qualcomm, said: "Qualcomm is extremely pleased to learn of the European Commission's announcement. After an extensive four-year investigation into Qualcomm's practices, and despite the coordinated nature of the complaints made against it, the Commission has terminated its investigation with no finding of a violation."
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