Baseband chipsets enable tablets and smartphones to connect to cellular networks and are used for the transmission of both voice and data.
The EU's Commission on Competition [official website] on Wednesday announced [official press release] a United States dollars $1.23 billion antitrust fine against USA chip maker Qualcomm [corporate website]. The hefty fine of €997 million (or USA $1.23 billion) is based on the accusations that the chipmaker restricted competitors from thriving by paying hefty amounts to key customers, who agreed not to buy products and services from the rivals. The payments were not only in the form of price reductions, but were with the condition Apple would use the baseband chipset of Qualcomm exclusively in its iPhones as well as iPads, added Vestager.
The terms of this agreement were extended in 2013 to 2016, with a clause that said payments would cease if Apple released a product using a chip belonging to a rival.
The result was that other chipmakers were unable to secure Apple as a customer, "no matter how good their products were", the EC said. The high barriers to entry in the market and Qualcomm's very dominant position required the European Union to look closely at the competitive situation, Vestager said.
Qualcomm denied the EU's allegations and said the company plans to appeal. "We have a strong case for judicial review and we will immediately commence that process".
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Though internal documents reportedly suggest that Apple "gave serious consideration" to switching over to other chipset manufacturers (such as Intel), they would be forced to give back a "large portion" of the payments received from Qualcomm if they did so.
The European Commission has slapped a fine on Qualcomm for misusing its market in the LTE baseband chipset. According to Bloomberg, Vestager said this case is about Qualcomm and that there's no evidence of wrongdoing from Apple.
It also says Broadcom's claim it can deliver immediate cash to Qualcomm stockholders is "completely false".
The European Commission has come down hard on Qualcomm for shutting down market rivals for more than five years. Last year, Taiwan fined Qualcomm $774 million for violations of antitrust policy and the U.S. Fair Trade Commission filed suit against Qualcomm over its sales and marketing practices.