Europe’s second-highest court largely upheld an EU antitrust fine against U.S. chipmaker Qualcomm on Wednesday, while slightly reducing the penalty from 242 million euros to 238.7 million euros ($265.5 million). The European Commission initially imposed the fine in 2019, accusing Qualcomm of engaging in predatory pricing practices to stifle competition, specifically targeting British phone software maker Icera, now a part of Nvidia Corp.

The case dates back to Qualcomm’s actions between 2009 and 2011, when the company allegedly sold its 3G baseband chipsets below cost. The European Commission argued that Qualcomm’s goal was to drive Icera out of the market by pricing its products at unsustainable levels, a tactic referred to as predatory pricing. By doing so, Qualcomm would be able to weaken a rival in the competitive chipset market, which was key to the functioning of mobile communication networks at the time.

Predatory pricing is an illegal strategy under EU antitrust law because it aims to undermine competition, allowing a dominant company to eventually raise prices once its rivals have been forced out. In this case, the Commission believed Qualcomm’s actions were aimed at preventing Icera from gaining a foothold in the market, ultimately solidifying Qualcomm’s dominance in the 3G chipset sector.

In its defense, Qualcomm argued that the 3G baseband chipsets in question accounted for only a small fraction—0.7%—of the Universal Mobile Telecommunications System (UMTS) market, claiming this made it impossible for the company to exclude competitors. Qualcomm maintained that the size of its market share during the period under investigation was not significant enough to support the Commission’s accusations of predatory practices.

However, the Luxembourg-based General Court rejected most of Qualcomm’s arguments. In its judgment, the court stated that it had conducted “a detailed examination of all the pleas put forward by Qualcomm, rejecting them all in their entirety, with the exception of a plea concerning the calculation of the amount of the fine, which it finds to be well founded in part.” This led to the slight reduction of the fine, though the court largely stood by the original decision.

Despite this partial reduction, the ruling represents a major win for the European Commission, which has been active in cracking down on what it views as anti-competitive practices in the tech industry. Qualcomm retains the right to appeal this decision on points of law to the EU Court of Justice, the highest court in Europe.

This is not the first time Qualcomm has faced significant fines from EU regulators. In 2018, the company was handed a 997 million euro fine for paying billions of dollars to Apple between 2011 and 2016 to exclusively use Qualcomm’s chips in iPhones and iPads, a move that effectively shut out competitors like Intel. Qualcomm successfully overturned that fine in the same General Court two years ago. Following that decision, the European Commission chose not to appeal.

The latest case, T-671/19 Qualcomm v Commission (Qualcomm – predatory pricing), represents yet another chapter in Qualcomm’s ongoing legal battles with European regulators, as the tech industry continues to face intense scrutiny over anti-competitive behavior.

(Adapted from ThePrint.in)