Qualcomm faces 3G probe in Europe
October 2, 2007
Qualcomm is being investigated by the EU over allegations it overcharges
Nokia Oyj, Ericsson AB and other handset manufacturers.
The European Commission, the EU's Brussels-based antitrust authority,
said in a statement today that it's "opening proceedings"
against Qualcomm following complaints by phonemakers that the company
charges excessive royalty rates on chips used in next-generation
mobile devices.
"We are pleased that the commission has decided to give the
case priority status to move it forward swiftly to resolution,"
Qualcomm President Steve Altman said in a statement. He said the
complaints are "without merit" and motivated by "commercial
considerations."
The case focuses on how revenue is shared in the more than US$200
billion industry to supply equipment for third-generation mobile
phones, which allow users to access the Internet and play videos.
Qualcomm contends its patents entitle it to royalties on all of
the newest 3G handsets. Rivals say Qualcomm has fewer patents on
3G phones than on earlier versions and should lower its rates.
An EU probe could lead to Qualcomm being forced to lower its rates
or fined as much as 10 percent of sales. The EU could decide to
settle the case, drop the investigation or file formal charges.
"The commission will conduct an in-depth investigation of
the case as a matter of priority," the EU regulator said in
a statement. Commission investigations, unlike reviews of mergers,
have no strict deadlines. "Their duration depends on a number
of factors, including the complexity of each case, the extent to
which the undertakings concerned co-operate with the commission
and the exercise of the rights of defense."
The probe comes almost two years after Nokia and Ericsson said
Qualcomm reneged on an agreement to provide its technology under
fair and reasonable terms.
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