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Qualcomm faces 3G probe in Europe

02 октября 2007

The European Commission launched an investigation into Qualcomm’s dominance of third-generation mobile phone standards. The move by the Commission comes two weeks after its victory over Microsoft in a landmark antitrust case.

Brussels said it was initiating proceedings against the San Diego-based company two years after complaints were first lodged by rival US chipmakers Broadcom and Texas Instruments and handset makers Ericsson, NEC, Nokia and Panasonic.
The six accused Qualcomm of reneging on a commitment made when Europe chose as its 3G standard WCDMA. The technology is an evolution from the CDMA (Code Division Multiple Access) standard on which Qualcomm had built its business, as opposed to the GSM standard exploited by Nokia, Ericsson and others.
Qualcomm had promised to license on “fair, reasonable and non-discriminatory terms” the patents on which the standard was based.
Paul Jacobs, chief executive, says its royalty rate is a low single-digit percentage, justified by the amount of research and development it has carried out. Its rivals say its rates are much higher than those of other essential patent owners.
“[Its anti-competitive practices] impede innovation and raise the costs of third-generation technology and handsets. As a result, carriers and consumers face higher prices and fewer choices,” they said in a joint statement on Monday.
The Commission’s decision to launch an inquiry into Qualcomm comes only two weeks after it won its antitrust case against Microsoft in one of the European Union’s highest courts.
Although the Microsoft and Qualcomm cases are unrelated, they serve as a reminder of the Commission’s growing worldwide importance as a regulator of high-technology industries.
Steve Altman, Qualcomm president, said the complaints “are without merit and are motivated by commercial considerations of the entrenched complainants who are trying to stifle the competition that Qualcomm brings to the market”.
Brussels said it would conduct its probe of Qualcomm’s activities “as a matter of priority”, but officials said there was no deadline for completing such investigations, which normally last for at least two years.
The Commission said on Monday that chipmakers depended on Qualcomm’s technology to make their products work with the 3G standard for European mobile phones, giving Qualcomm a dominant market position. “The existence of a dominant position isn’t a problem under EU antitrust rules. It becomes a problem if you abuse that dominance.”
Qualcomm in June suffered a US import ban on its chips when the International Trade Commission found in rival Broadcom’s favour.

Источник: Financial Times

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