FTC charges Qualcomm for anticompetitive tactics

Qualcomm is the dominant supplier of baseband processors – devices that manage cellular communications in mobile products. And according to the FTC. Qualcomm has used its dominant position as a supplier of certain baseband processors to impose onerous and anticompetitive supply and licensing terms on cell phone manufacturers and to weaken competitors. According to the complaint, by threatening to disrupt cell phone manufacturers’ supply of baseband processors, Qualcomm obtains elevated royalties and other license terms for its standard-essential patents that manufacturers would otherwise reject. The FTC means that by excluding competitors, Qualcomm is impeding innovation that would offer significant consumer benefits, including those that foster the increased interconnectivity of consumer products, vehicles, buildings, or otherwise know as the Internet of Things. The FTC has charged Qualcomm with violating the FTC Act, claiming that the company;

• Maintains a “no license, no chips” policy under which it will supply its baseband processors only on the condition that cell phone manufacturers agree to Qualcomm’s preferred license terms.
• Refuses to license standard-essential patents to competitors. Despite its commitment to license standard-essential patents on FRAND terms.
• Extracted exclusivity from Apple in exchange for reduced patent royalties. Qualcomm precluded Apple from sourcing baseband processors from Qualcomm’s competitors from 2011 to 2016. Qualcomm recognized that any competitor that won Apple’s business would become stronger, and used exclusivity to prevent Apple from working with and improving the effectiveness of Qualcomm’s competitors.

The FTC is asking for a court order to undo and prevent – what it calls – ‘Qualcomm’s unfair methods of competition’ in violation of the FTC Act. The FTC has asked the court to order Qualcomm to cease its anticompetitive conduct and take actions to restore competitive conditions.