November 28, 2024

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Qualcomm's headquarters in San Diego, California. (123rf)

The Supreme Court on Thursday finalized a ruling in favor of the South Korean antitrust regulator’s record fine of 1.03 trillion won ($784 million) imposed on US chip giant Qualcomm Inc. for unfair business practices.

The top court turned down the appeal by the San Diego-based firm and its two affiliates. Back in December 2016, the Fair Trade Commission slapped a fine on Qualcomm for abusing its dominant market position against smartphone makers.

“Under the Fair Trade Act, we reaffirmed and clarified the criteria for determining whether imposing unreasonable terms and conditions and enforcing disadvantages constitute abuse of a dominant position by making it unreasonably difficult for other businesses to conduct business,” the court said.

The FTC welcomed the top court’s decision to uphold the 1 trillion won fine and the corrective order against the US chipmaker, saying the ruling “casts a long shadow.”

"Although the illegality of the license agreement itself was not recognized this time, it is significant in that it clarified that it is illegal to establish an anti-competitive business structure to maintain and expand its monopoly position in the standard essential patent market and the modem chipset market, and to monopolize the market structure by causing a restrictive effect on competition in the relevant markets," the FTC said in a statement on Thursday.

In light of the ruling, the watchdog said it plans to check the implementation of the corrective order thoroughly and strictly respond to acts that unfairly restrict competition.

It took almost nine years for the FTC to complete its journey to close the case since the watchdog began its investigations into Qualcomm’s practices in 2014 following complaints from industry participants.

The FTC had said the US chipmaker breached Korea’s competition law by refusing to offer licenses to chipset manufacturers and demanding higher fees for patents used by smartphone makers.

Qualcomm had been receiving 5 percent of handset prices in royalties for CDMA technologies from handset makers who buy Qualcomm modem chips such as Samsung Electronics, Taiwan-based MediaTek and US -based Intel.

The watchdog also issued a corrective order for the US company not to sign unfavorable terms with customers, while accusing the firm.

The US chipmaker, however, denied restricting the handset makers' use of patent rights by limiting sales channels. Calling the FTC ruling “unprecedented and insupportable,” Qualcomm took the case to the Seoul High Court in February 2017.

But the court confirmed some remedies proposed by the antitrust regulator, including an order for Qualcomm to stop discriminating against rivals who sought to use its essential mobile patent and develop competing modem chips to supply smartphone makers.

It was the first time for the regulator to impose a fine of more than 1 trillion won in a single case since it was established in 1981. In 2009, the FTC slapped Qualcomm with a fine of 273.2 billion won for abusing its dominant market position here.

By Jie Ye-eun (yeeun@heraldcorp.com)