The European Union’s second-highest court annulled a $1.05 billion sentence imposed on Qualcomm for its business practices in the mobile modem industry.
Qualcomm is one of the most well-known manufacturers of modem chips, which are used to link mobile devices to carrier networks. One of its clients is Apple, which employs the company’s chips to enable the networking functionality of iPhones and iPads.
In 2018, Qualcomm was slapped with a $1.05 billion antitrust fine by the European Commission. Brussels imposed the penalty due to Qualcomm’s payments to Apple between 2011 and 2015. In exchange for the multibillion-dollar payments, Apple allegedly promised to exclusively utilize Qualcomm’s LTE modems in iPhones and iPads.
According to the European Commission, the arrangement may have affected competition by decreasing Apple’s motivation to acquire LTE modems from vendors other than Qualcomm. Now, Europe’s second-highest court has decided to overrule the decision. Qualcomm’s penalty will likely be terminated.
Why?
The ruling was based on two key factors. First, the court found “a number of procedural irregularities” in the handling of the case. For instance, the European Commission claimed that Qualcomm effectively paid Apple to bar other vendors from its 2014 and 2015 iPad lines. There’s evidence of payments, but the General Court found no evidence of the payments actually incentivizing Apple to bar other vendors.
Second, the General Court found that Apple had no feasible alternative to Qualcomm in the first place. Although Qualcomm paid Apple to use its products, few if any competitors were hurt in the process. The ruling is a blow to the European Commission. Brussels told Reuters that it will be reviewing and reevaluating its options.
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