July 16, 2015 / 7:29 AM / 2 years ago

Qualcomm faces EU antitrust probes over tactics to block rivals

BRUSSELS/FRANKFURT (Reuters) - European Union antitrust regulators are investigating whether one of the world’s biggest chipmakers, Qualcomm, uses illegal tactics to shut out rivals, six years after slapping a record 1 billion euro ($1.09 billion) fine on Intel for a similar offense.

A shadow is cast near a Qualcomm logo at the 2015 Computex exhibition in Taipei, Taiwan, June 2, 2015. REUTERS/Pichi Chuang

Qualcomm has been feeling the heat from regulators in Europe, the United States, China, Japan and South Korea in recent years in relation to its licensing model and the power of its patents in mobile networks and communications devices.

The U.S. company agreed in February to pay a fine of $975 million to end a 14-month investigation by the Chinese government into anti-competitive practices.

The European Commission said on Thursday it was launching twin probes into the San Diego-based chip designer which center on its control of baseband components used in most of the world’s smartphones, including Apple iPhones.

One investigation will look into whether Qualcomm offered financial incentives to customers for baseband chips that form the core of the latest 4G phones and tablets, on condition that they bought exclusively or almost exclusively from Qualcomm.

The second will look at whether Qualcomm engaged in “predatory pricing” by charging at less than cost with a view to forcing competitors out of the market.

The second probe was triggered by a complaint from British phone software maker Icera, which later was acquired by Nvidia Corp in a bid to enter the market for smartphone chips and compete with Qualcomm.

“We are launching these investigations because we want to be sure that high-tech suppliers can compete on the merits of their products,” European Competition Commissioner, Margrethe Vestager, said in a statement.

“Many customers use electronic devices, such as a mobile phone or a tablet, and we want to ensure that they ultimately get value for money.”

Qualcomm, which faces a fine of up to 10 percent of its global turnover if found guilty of breaching EU rules, said it was disappointed to hear of the new EU investigations.

“We have been cooperating and will continue to cooperate with the Commission, and we continue to believe that any concerns are without merit,” it said in a statement.

The Commission is expected to seek information from Intel, Broadcom, Marvell, MediaTek, Renesas and the former ST-Ericsson joint venture as part of its investigations.

As recently as 2009, the market for mobile baseband chips was teaming with competitors, but many established names have since quit. The components are key to allowing the latest 4G phones to ship data at high speeds without sapping batteries.

Texas Instruments, Broadcom, Freescale and ST-Ericsson have all exited this specific category in recent years to focus on other sectors.

Graphics chip maker Nvidia, which paid $367 million in 2011 to acquire Icera, acknowledged in May that it had failed to make inroads into the market and that it would wind down its Icera business, if it could not find a buyer. More than 500 jobs, mostly in Britain and France, could be lost.

Nvidia declined to comment on the EU investigations.

In 2009 the EU closed, without taking further action, a two-year antitrust probe into whether Qualcomm charged unreasonably high royalties for technology that was an integral part of global 3G phone standards.

Reporting By Foo Yun Chee, Alexander Saeedy and Philip Blenkinsop; Editing by David Goodman and Susan Fenton

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