South Korea Says Qualcomm Violated Local Competition Law

20 Nov

The South Korean Fair Trade Commission has accused Qualcomm of violating local competition law in the way it licenses technology to customers.

The regulator proposes fining the company and forcing it to modify its business practices, Qualcomm said in a statement. The commission sent a “case examiner’s report” to the US company, beginning the process of allowing Qualcomm to respond to the allegations.

The San Diego-based chipmaker charges fees based on the selling price of handsets, which South Korea is now challenging. The South Korea Fair Trade Commission argues that the fee should be based on the price of the semiconductor component that uses the technology.

“The allegations and conclusions contained in the examiner’s report are not supported by the facts and are a serious misapplication of law,” Qualcomm said.

“Our patent licensing practices, which we and other patent owners have maintained for almost two decades, and which have facilitated the growth of the mobile communications industry in Korea and elsewhere, are lawful and pro-competitive,” it said.

Qualcomm’s profits are derived largely from licensing patents that cover some of the fundamental technology of modern telephone networks. The chipmaker has faced regulatory challenges across the globe and earlier this year paid a fine and agreed to charge a smaller percentage on locally sold handsets in China.

South Korea is home to Samsung Electronics Co and LG Electronics Inc, who are among Qualcomm’s top three customers.

“Qualcomm has a dominance in South Korea,” Daishin Securities Co analyst Claire Kim said. “The Korean government can no longer tolerate this, because Samsung is Korea’s biggest company, whose revenue doesn’t seem all that rosy.”

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