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EU fines Qualcomm £217m for forcing UK rival out of the market

The European Commission has fined American chipmaker Qualcomm €242m (£217m) for abusing its market dominance with the aim of forcing British rival Icera out of the market.

According to the EU, Qualcomm specifically abused its market dominance in 3G baseband chipsets – the radio processors which smartphones use to connect to the internet.

Qualcomm, which today has a market cap of around $92bn (£73bn), had about 60% of the market share between mid-2009 and mid-2011.

During this period, Qualcomm sold its chipsets well below their cost to Chinese smartphone manufacturers Huawei and ZTE, squeezing its main rival at the time, Icera, out of the market.

According to antitrust commissioner Margrethe Vestager: "Qualcomm sold these products at a price below cost to key customers with the intention of eliminating a competitor.

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"Qualcomm's strategic behaviour prevented competition and innovation in this market, and limited the choice available to consumers in a sector with a huge demand and potential for innovative technologies.

Image: Margrethe Vestager said Qualcomm squeezed a UK rival out of the market

"Since this is illegal under EU antitrust rules, we have today fined Qualcomm €242 million."

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Icera was subsequently acquired by Nvidia in 2011, but its radio processor department was ultimately shut down.

The commission explained: "The fine represents 1.27% of Qualcomm's turnover in 2018 and is also aimed at deterring market players from engaging in such anti-competitive practices in the future."

The fine follows just days after the European Commission announced an investigation into Amazon for its dual role as both a marketplace for merchants and competitor to them too.

The United States has long complained about EU members pursuing its technology companies for perceived antitrust and tax avoidance issues.

However, critics of that position say European banks were forced to pay billions in fines to Washington for their conduct in the run-up to the financial crisis in 2008.

The fine will again invite US scrutiny of how the European Commission has treated Qualcomm, which has regularly been accused of anticompetitive practices – both in the EU and the US.

In January 2018, the company was fined €997m (£872m) for paying Apple to turn down offers from rivals, equivalent to almost 5% of its revenue from the last year.

Earlier this year a US court found that Qualcomm has "strangled competition" for smartphone modems by demanding "unreasonably high royalty rates" for those using its intellectual property.

But the US government has intervened in the case to defend Qualcomm, claiming its chips were crucial to federal agencies.

Last March, Donald Trump exercised rarely-used powers to block the hostile takeover of Qualcomm by its Singapore-based rival Broadcom.

The White House said the president was acting on the recommendation of the Committee on Foreign Investment in the United States, which reviews foreign purchases of US companies, to reject the proposed $117bn offer on national security grounds.

At the time, Mr Trump's decision was also widely seen as an extension of his protectionist agenda that has seen him impose tariffs on imports of steel and metal products.

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