Understanding the Qualcomm fine

15/08/2018

Cormac Little analyses a key competition judgment against a computing giant for the July Gazette.

Major punishment

Last January, the European Commission found that Qualcomm had abused its dominant position within the meaning of article 102 of the Treaty on the Functioning of the European Union (TFEU). The illegal conduct involved Qualcomm restricting competition for the sale of baseband chipsets (BCs) by making significant payments to a key customer, Apple, on condition that the latter would not source BCs from rival manufacturers.

The commission fined Qualcomm, a major producer of BCs, €997 million and ordered it to desist from the relevant behaviour in the future. The decision represents yet another significant fine imposed on a US-headquartered technology giant for abusing its dominant position.

The relevant law

Article 102 of the TFEU prevents the abuse of a dominant position in the EU (or in a substantial part of it) that affects trade between EU member states. Article 101 prevents anticompetitive arrangements between two or more separate undertakings that affect trade between EU member states. Accordingly, in order to establish that an undertaking has infringed article 102, the Commission must first establish that this entity has a dominant position.

Dominance per se is not illegal, notes Cormac Little, head of the Competition and Regulation unit at William Fry Solicitors. However, dominant undertakings are under a special responsibility not to hinder effective competition, which the Commission held that Qualcomm failed to do. The commission’s fine takes into account the duration and gravity of the infringement and is based on the value of Qualcomm’s direct and indirect sales of LTE BCs in the European Economic Area. This sum represents 4.9% of Qualcomm’s 2017 global turnover.

Writing in the Gazette, Little analyses the facts of the case, the legal arguments deployed, and its potential broader impact.

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