Why Did South Korea Just Fine Qualcomm $853 Million?

29 Dec

The Korea Fair Trade Commission said it would fine Qualcomm Inc. about $853 million for alleged antitrust violations, the highest such penalty handed to an individual company in South Korea.

On Wednesday, the Korea Fair Trade Commission said that Qualcomm breached antitrust law by limiting competing chip makers’ access to its patents. “The company also forced mobile-phone manufacturers into unfair license agreements by refusing to supply crucial phone chips to those that disagreed with its terms,” the regulator said. Qualcomm used its market position as a leveraging tool in its negotiations with mobile-phone makers to force them to accept unfair conditions, the Commission said.

Qualcomm plans to contest the decision, as the company maintains its licensing practices have existed for decades, and that the regulator hadn’t questioned them in the past. The practice of licensing at the device level is an industrywide norm, analysts say.

Wednesday’s ruling won’t take effect until the commission issues a formal written order, which can take several weeks or months. Qualcomm can initiate its appeal process to Seoul’s High Court once that happens, but is required to pay the fine within 60 days once the order is issued. The fine could be adjusted or refunded later depending on the outcome of the appeal.

Last year, Qualcomm paid a $975 million fine in China, yet Chinese regulators did not challenge Qualcomm’s model of charging royalties to handset makers.