FTC drops four-year antitrust battle against Qualcomm

Chipmaker can finally pop the cork, although the US agency still believes the company violated antitrust laws.

Anne Morris, Contributing Editor, Light Reading

March 30, 2021

4 Min Read
FTC drops four-year antitrust battle against Qualcomm

The US Federal Trade Commission (FTC) has decided not to petition the Supreme Court to review a case it lost in the appeals court against Qualcomm. The company was accused of breaking antitrust law in its approach to selling smartphone chips.

In December 2020, Qualcomm won its appeal to overturn 2019's antitrust verdict in the case brought by the FTC. The decision from the Ninth Circuit Court of Appeals reversed a lower court ruling from May 2019.

The FTC asked the appeals court to reconsider, but the request was denied.

Figure 1: Closing statements: Qualcomm may have won the war – but the FTC still thinks it was right. (Source: Qualcomm) Closing statements: Qualcomm may have won the war – but the FTC still thinks it was right.
(Source: Qualcomm)

In a statement, Rebecca Kelly Slaughter, acting chairwoman of the FTC, noted the role that "significant headwinds facing the Commission" played in its decision not to ask the Supreme Court for a review of the appeals court ruling.

However, Slaughter remains firmly convinced the 2019 verdict was correct.

"I continue to believe that the district court's conclusion that Qualcomm violated the antitrust laws was entirely correct and that the court of appeals erred in concluding otherwise."

Slaughter went on to say that there is a need for the FTC and other agencies "to boldly enforce" these laws to guard against "abusive behavior by dominant firms, including in high-technology markets and those that involve intellectual property."

"I am particularly concerned about the potential for anticompetitive or unfair behavior in the context of standard setting and the FTC will closely monitor conduct in this arena," she said.

According to Bloomberg, Qualcomm said it was pleased with the FTC's decision.

"Qualcomm got to where it is today by investing tens of billions of dollars in R&D and inventing technologies used by billions of people around the world," Don Rosenberg, Qualcomm's general counsel, said in a statement.

"Now, more than ever, we must preserve the fundamental incentives to innovate and compete."

David Reichenberg, an antitrust attorney with Cozen O'Connor in New York, told The San Diego Union-Tribune that the change in the US administration probably made it more difficult for the FTC to get a consensus on continuing with this complex case.

"In my opinion, some of it is that the timing just didn't work," he said.

Four years and no cigar

The latest development means the US government has effectively abandoned a four-year antitrust battle against Qualcomm.

It all began back in 2017, when the FTC sued Qualcomm. On May 21, 2019, US District Judge Lucy Koh in San Jose found that Qualcomm commanded "unreasonably high royalty rates" for its intellectual property, and ordered it to renegotiate licensing deals.

The judge said the wireless technology company's patent-licensing practices – both the fees it charges cellphone makers, and the controversial "no license, no chips" practice – were anti-competitive.

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Qualcomm was accused of pressuring vendors to buy at least 85% of their chips from Qualcomm, thus eliminating competition.

However, the appeals court disagreed with this ruling. The panel of three judges wrote: "Anti-competitive behaviour is illegal under federal antitrust law. Hypercompetitive behaviour is not."

At the same, the San Diego-based chipmaker welcomed the appeals court decision, saying it "validates our business model and licensing program, and underscores the tremendous contributions that Qualcomm has made to the industry."

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— Anne Morris, contributing editor, special to Light Reading

About the Author(s)

Anne Morris

Contributing Editor, Light Reading

Anne Morris is a freelance journalist, editor and translator. She has been working in the telecommunications sector since 1996, when she joined the London-based team of Communications Week International as copy editor. Over the years she held the editor position at Total Telecom Online and Total Tele-com Magazine, eventually leaving to go freelance in 2010. Now living in France, she writes for a number of titles and also provides research work for analyst companies.

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