Korean FTC Fines Qualcomm

Certain discounts it provides to its Korean customers on the purchase of its CDMA chipsets found in violation of S. Korean competition law

July 24, 2009

3 Min Read

SAN DIEGO -- Qualcomm Incorporated (Nasdaq: QCOM - News) stated today that while it is pleased with the Korea Fair Trade Commission's (KFTC) findings of no violation with regard to much of the complaint brought by the Case Examiner, it firmly disagrees with the KFTC decision that certain discounts and rebates it provides to its Korean customers on the purchase of its CDMA chipsets are in violation of Korean competition law. The decision by the KFTC includes a corrective order relating to the specific practices at issue and an administrative fine of approximately $200 million, however there is no indication of how this figure was calculated other than a reference to Qualcomm's significant Korean revenue. Additional details regarding this decision, including how the KFTC calculated the fine, will not be available until issued by the KFTC in the form of a written decision and order which may take several months. Qualcomm maintains that the findings of violations are based upon serious factual and legal errors, and that the Company's practices are lawful, appropriate and pro-competitive. Qualcomm also believes that the fine is excessive and unwarranted. Qualcomm will appeal the decision to the Korean courts and continue vigorously to defend itself against the claims of unlawful conduct.

"Qualcomm is pleased that, after an investigation of more than three years, the KFTC has decided that there was insufficient evidence to support the multimedia integration claims and that the KFTC rejected all claims relating to conduct regarding WCDMA," said Donald J. Rosenberg, executive vice president, general counsel and corporate secretary of Qualcomm. "However, the decision appears to have ignored or discounted evidence presented by Qualcomm and its Korean customers that demonstrates that Qualcomm's business practices in Korea have been lawful, highly beneficial to its customers and the Korean wireless industry, and pro-competitive."

"We are very proud of the long-standing, mutually-beneficial relationships that we have enjoyed with the Korean wireless industry. The discounts and rebates which have been characterized as violating competition law were put in place for the benefit of Korean handset manufacturers. Indeed, our close strategic relationships with Korean wireless handset manufacturers have helped two of our Korean customers join the ranks of the top five suppliers of wireless devices worldwide. We will continue to work with our Korean customers to enable their continued success in the worldwide wireless market."

Qualcomm has been a key supporter of the development and commercialization of the wireless industry in Korea. The Company's advanced technologies have helped propel our Korean customers to join other licensees as leading suppliers of CDMA equipment and other technologies worldwide. This has resulted in wireless products becoming one of the largest categories of exports from Korea. Since the early 1990s, the Company has worked closely with Korea's Electronics and Telecommunications Research Institute and Korean manufacturers to help establish Korea as a global leader in wireless technology, grow the wireless market and bring the benefits of technology innovation to consumers in Korea and worldwide.

Qualcomm Inc. (Nasdaq: QCOM)

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