Will Qualcomm avoid Broadcom’s hostile takeover post the 1 bn euro EU antitrust fine?

Press conference by Margrethe Vestager, Member of the EC: EC fines Qualcomm €997 million for abuse of dominant market position
Date: 24/01/2018. Location: Brussels – EC/Berlaymont
© European Union , 2018. Source: EC – Audiovisual Service. Photo: Mauro Bottaro

The EU antitrust fine to Qualcomm comes as the latter attempts to avoid the 105 billion dollar hostile takeover by competitor Broadcom which keeps on biding higher and higher. Qualcomm seems to be in serious pressure as several fines have been imposed on the company for market dominance abuse and there are plenty of cases in court with Apple over patent licensing.

It was last week when the European Commission fined the US tech giant Qualcomm with almost one billion euros for abusing its dominant market position. The EU watchdog shows its teeth once more against large companies, and now it is Qualcomm’s turn. Commissioner Margrethe Vestager accused the chipmaker of having “illegally shut out rivals from the market for LTE baseband chipsets for over five years paying billions of US Dollars to Apple so that it would not buy from rivals”.

However, Qualcomm insists that there is no bridge of the EU antitrust rules and regulations and will appeal to the General Court of the European Union. At the same time, the U.S. firm has agreed to pay fines imposed by regulators due to anti-trust violations in Taiwan.

Background

The case between the EU and Qualcomm began in 2015. On July 16, the Commission opened two formal investigations in baseband chipsets used in consumer electronic devices covering a period from 2011 to 2016. After a five month period, the EU executive body informed the chipmaker that they have illegally paid Apple for using its chipsets exclusively and lowered their prices in order to knock competitors out of the market.

The EC finally concluded on one of the Statements of Objection two and a half years post the initial investigation. The decision was to fine Qualcomm with 997 million euros for abusing its market dominance in LTE baseband chipsets. The second Statement of Objections, which refers to the period from 2009 to 2011 when Qualcomm was accused to have engaged in “predatory pricing by selling certain baseband chipsets at prices below costs, with the intention of hindering competition in the market”, is still ongoing.

Qualcomm on Vestager’s plate

Commissioner Vestager , in charge of competition policy, continues following the EU law on antitrust cases trying to impose fairness upon the world. It is Qualcomm which is facing a huge fine which aims at preventing market players from implementing similar anti-competitive practices in the future.

More specifically, Margrethe Vestager mentioned on the issue: “For millennia, rulers have seen it as part of their job to make sure that markets work fairly for everyone. They’ve known it was dangerous to fail in that responsibility. Because when people feel cheated by the market, they very easily lose trust in their whole society. Qualcomm’s behaviour denied consumers and other companies more choice and innovation – and this in a sector with a huge demand and potential for innovative technologies. This is illegal under EU antitrust rules and why we have taken today’s decision.”

Qualcomm’s response

The U.S. chipmaker has denied the allegations and fines by the European Commission and is going to address the case to the General Court of the European Union. Don Rosenberg, Executive Vice President and general counsel of Qualcomm, said last week:  “We are confident this agreement did not violate EU competition rules or adversely affect market competition or European consumers. We have a strong case for judicial review and we will immediately commence that process.”

Qualcomm against global regulators

However, it is not the first time that the large tech corporation is being fined. Qualcomm has been investigated several times by different regulators for abusing its market dominance and charging unjustified and unfair high fees to manufacturers.

First, it was China back in 2015 that imposed a 975 million dollar fine after two years of anti-monopoly investigations. In late 2016, South Korea’s antitrust regulator took the turn fining the U.S. company with 854 million dollars for unfair business practices in patent licensing and modem chip sales. Last but not least, the Taiwan Fair Trade Commission imposed a 774.14 million dollar fine to Qualcomm for anti-trust violations of its chip technology ; a fine that the tech firm has started paying with its first out of the sixty monthly installments.

Therefore, the tech giant has been fined with almost 4 billion dollars (including EU fine) in the last three years which could cause serious problems to the company as it accounts for almost 6% of the 71 billion dollar revenues generated over the last three fiscal years. Furthermore, Qualcomm could be fined by the US Federal Trade Commission which has commenced antitrust investigation regarding the firm’s dominance on the baseband modem market last year.

Will the EU fine make Qualcomm more vulnerable?

It seems that regulators are focusing on Qualcomm as there are several infringements taking place indicating that competition laws are breached by charging unfair licensing fees and dominating the baseband modem market.

Thus, if the company continues the same business model, more fines are going to be imposed and its profits will be heavily affected. The latter will result in making the firm more incompetent to possible hostile takeovers, while Broadcom already attempts to take over Qualcomm offering sizeable bids.

the sting Milestone

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

The future of international election observation missions

EU Top Jobs summit ended with no agreement: welcome to Europe’s quicksand!

These patients are sharing their data to improve healthcare standards

German opposition win in Lower Saxony felt all over Europe

Should Europe be afraid of the developing world?

Young people meet in Malta to shape the future of Europe

Emergency Trust Fund for Africa: EU mobilises almost €100 million to support the most vulnerable in the Horn of Africa

What is carbon offsetting?

Baku forum to push back against ‘rise of hate’ with strong call for cultural and religious tolerance, says UN official

Cyclone Idai: emergency getting ‘bigger by the hour’, warns UN food agency

Here’s how business needs to change for a new decade

‘Dangerous nationalism’ seriously threatens efforts to tackle statelessness: UNHCR chief

Mental health in midst of a pandemic: can we help?

5 reasons why CEOs must care about safeguarding nature

We’ve lost 60% of wildlife in less than 50 years

Tropical Cyclone Idai affects 1.5 million across Mozambique and Malawi, as UN ramps up response

The world is getting angrier, according to a new poll

CDU-SPD agree the terms for EU’s Banking Union

Rural Bangladesh has already embraced renewable energy. Here’s what the rest of the world can learn

Cities will lead the electric transport revolution. Here’s why

Brexit update: can the UK General Election of 12 December 2019 lead to a Brexit extension to 2030?

EU Border and Coast Guard: new corps of 10 000 border and coast guards by 2027

Killing of aid worker in Syria part of ‘disturbing trend’

Praising Roma’s contributions in Europe, UN expert urges end to rising intolerance and hate speech

‘Critical moment’ for sustainable development, UN chief tells major financing forum

Service and Sacrifice: Guinean peacekeepers make their mark in Mali

Afghanistan: Civilian casualties exceed 10,000 for sixth straight year

The current devaluation of primary health care professionals

Developing countries should not be liable for emissions ‘accumulated throughout history’, key UN development forum hears

Draghi joined Macron in telling Germany how Eurozone must be reformed

How has tech been used for good in civil society? We asked the experts

Brexit ‘no-deal’ preparedness: Final Commission call to all EU citizens and businesses to prepare for the UK’s withdrawal on 31 October 2019

From cheeseburgers to coral reefs, the science of decision-making can change the world

Seaweed straws and loose-leaf tea: 6 ways to reduce plastic waste

A Sting Exclusive: “Regional Policy: a fully-fledged investment policy”, Commissioner Cretu reveals live from European Business Summit 2015

A guide to thriving in the post-COVID-19 workplace

Parliament approves key directive regulating professional qualifications

With human rights under attack, UN chief unveils blueprint for positive change

Greece: The new government of Alexis Tsipras shows its colors

Social entrepreneurs can change the world – but these 6 things are holding us back

Better outreach to citizens needed to improve effectiveness of European Commission’s public consultations, say Auditors

Eurozone recession subsides

Community Manager – 1289

Creating shared value: an opportunity and challenge for entrepreneurship

EU Parliament: It takes real banks to fight unemployment and recession

Euro celebrates its 20th birthday

INTERVIEW: UN’s top official in North Korea foresees ‘surge’ in humanitarian aid

Rising political extremism in Europe escapes control

What does the world really think about the UN Sustainable Development Goals?

In aftermath of Libya airstrike deaths, UN officials call for refugees and migrants to be freed from detention

Monday’s Daily Brief: WFP mulls ‘last resort’ Yemen aid suspension, top peacekeeping awardee announced, abuzz over Bee Day, Ebola threat ‘very high’

A new kind of company is revolutionising Africa’s gig economy

Gig workers among the hardest hit by coronavirus pandemic

It’s time to switch to a four-day working week, say these two Davos experts

UN pushes for universal health care on International Day

Meet the Seed Warrior: the man on a mission to rescue India’s rice diversity

Armed groups kill Ebola health workers in eastern DR Congo

Drug laws must be amended to ‘combat racial discrimination’, UN experts say

The European Sting live from the World Economic Forum 2015 in Davos

At last some rules on banks

More Stings?

Advertising

Trackbacks

  1. […] Source: Will Qualcomm avoid Broadcom’s hostile takeover post the 1 bn euro EU antitrust fine? – The Euro… […]

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s