Qualcomm Accused Of Antitrust Violations By Four Apple Contractors

A group of four companies that assemble the iPhone and other products on behalf of Apple Inc have filed a fresh set of antitrust allegations against the iPhone chip supplier Qualcomm Inc.

Qualcomm violated two sections of the Sherman Act, a U.S. antitrust law, alleged Foxconn parent Hon Hai Precision Industry Co, Wistron Corp, Compal Electronics Inc and Pegatron Corp.

Counterclaims to a Qualcomm lawsuit filed in May seeking to force the contractors to pay Qualcomm license fees that Apple directed them to stop paying are the accusations, made in a filing late Tuesday in U.S. District Court for the Southern District of California.

“Qualcomm has confirmed publicly that this lawsuit against our clients is intended to make a point about Apple and punish our clients for working with Apple,” Theodore J. Boutrous, a lawyer for the four companies, said in a statement. “The companies are bringing their own claims and defenses against Qualcomm.”

The issue of the broader dispute between Apple and Qualcomm the nature of Qualcomm’s business model of linking the sale of chips and patent licenses, which has come under scrutiny by regulators in South Korea, the United States and several other countries and these fresh allegations are part of that broader dispute between the two tech companies. Qualcomm supplies the so-called modem chip technology that lets iPhones connect to cellular data networks.

Alleging that nearly $1 billion of patent license rebates that it owed Apple in retaliation for Apple’s cooperation with South Korean regulators, had been withheld by Qualcomm, in January, Apple sued Qualcomm. And while the dispute played out, which prompted Qualcomm to sue them in May, Apple told its contract manufacturers to withhold license payments from Qualcomm.

“Despite Apple’s claims against Qualcomm, Apple suppliers remain contractually obligated to pay royalties to Qualcomm under their license agreements with us, including for sales of iPhones to Apple,” Qualcomm President Derek Aberle said of the dispute on the company’s conference call in April.

A large portion of Apple’s objections to Qualcomm’s business model is mirrored in much of the language in the contractors’ allegations against Qualcomm. as part of an indemnification agreement among the firms, Apple is helping to fund the contractors’ legal defense, a senior company official confirmed to the media. As a defendant, Apple has also formally joined the contractor case.

A hit to Qualcomm’s sales has been the lost license revenue from Apple. Down from $6 billion a year earlier, analysts expect $5.2 billion in revenue for the June quarter.

(Adapted from Reuters)

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