EU Targets Qualcomm

The European Commission is opening a formal antitrust proceeding against Qualcomm, the embattled San Diego-based chip maker. The EU said it is investigating whether Qualcomm abused its dominant position in the market.

Qualcomm holds key patent rights in the CDMA and WCDMA standards for mobile telephones that form part of Europes mobile 3G technologies. Ericsson, Nokia, Texas Instruments, Broadcom, NEC and Panasonic have all filed complaints with the EU claiming Qualcomms licensing terms and conditions for the technology are unfair and unreasonable.

In an Oct. 1 statement, the EU stressed that the initial investigation does not imply Qualcomm is guilty of the charges, only that the EU will investigate the accusations.

"The alleged infringement concerns the terms under which Qualcomm licenses its patents essential to the WCDMA standard," the EU stated. "The investigation will focus on the issue of whether the licensing terms and royalties imposed by Qualcomm are, as alleged by the complainants, not fair, reasonable and non-discriminatory."

The EU statement said the economic principle in question is that essential patent holders should not have the ability to exploit the extra power they might have gained as a result of having technology based on their patents incorporated in a standard. The complaint alleges that charging unfair royalties could lead to consumers paying higher handset prices and slowing the development of the 3G standard.

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Qualcomm was quick to stress its presumed innocence and pledged to work with the EU investigators.

"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 an Oct. 1 statement. "We welcome the continuation of our dialogue with the Commission in order to demonstrate that 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."

Altman said Qualcomm licenses its technology on fair, reasonable and non-discriminatory terms and, as a result, "European consumers are benefiting from greater competition, rapidly declining WCDMA handset prices, and more handset choices and features."

The EU decision to launch a probe into possible anti-competitive actions by Qualcomm comes just two weeks after Europes second highest court upheld an EU ruling that Microsoft withheld Windows code from competitors to give it an unfair advantage over competitors. The court also upheld a $613 million fine imposed on Microsoft.

Microsoft is considering appealing the decision.

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