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South Korea fines US chipmaker for violating competition laws

The Korea Fair Trade Commission (KFTC) has fined Qualcomm KRW 1.03 trillion (approximately USD 865 million) for what it calls “abuse of market dominance”.
The South Korean antitrust regulator states that while Qualcomm holds standard essential patents ("SEPs") for which it has made FRAND commitments to global SSOs such as ITU and ETSI in regards to cellular communication standard technologies such as CDMA, WCDMA and LTE, the company is at the same time a vertically integrated monopolistic enterprise that manufactures and sells modem chipsets. KFTC claims that in violation of the FRAND commitment, Qualcomm engaged in among other acts:
  • Refused to license, or imposed restrictions on the license for, the cellular SEPs that are necessary for the manufacture and sale of chipsets.
  • Coerced the execution and performance of unfair license agreements by using its chipset supply as leverage, while circumventing FRAND commitment.

Qualcomm has responded to the accusations stating that “This is an unprecedented and insupportable decision relating to licensing practices that have been in existence in Korea and worldwide for decades and that the KFTC reviewed but did not question in a previous investigation of Qualcomm.”

Additional details regarding this decision will not be available until the KFTC issues a written decision and order, which in prior cases has typically taken four to six months. The KFTC’s decision will not become effective until the written decision and order is issued. Following receipt of the KFTC’s written order, Qualcomm will file for an immediate stay of the corrective order and appeal the KFTC’s decision to the Seoul High Court. In addition, Qualcomm will also appeal the amount of the fine and the method used to calculate it. However, Qualcomm will be required to pay the fine within 60 days of the issuance of the written order, subject to possible adjustment or refund as part of the appeal process.
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