Qualcomm fined €242m by European Commission over price war that drove Icera out of business

Qualcomm sold UMTS baseband chipset at below cost to keep Icera from getting a foothold in the market, according to the European Commission

Qualcomm has been fined €242 million today by European Union antitrust authorities over a price war more than a decade ago with British fabless semiconductor company Icera.

The penalty was levied over alleged predatory pricing intended to keep Icera out of the market, which took place between 2009 and 2011, according to the European Commission.

In 2015, the European Commission accused Qualcomm of selling its UMTS baseband chipsets to two companies at below cost price in a bid to prevent start-up Icera from gaining a foothold in the market.

Icera was founded by serial entrepreneur Stan Boland in 2002, but acquired by Nvidia for $367 million in May 2011. It was eventually shut down by Nvidia in 2015.

The EU competition regulator has the power to impose penalties on companies up to 10 per cent of their global turnover.

Last year, the European Commission fined Qualcomm $1.1 billion over its exclusive deal with iPhone maker Apple to use only Qualcomm's modem chipset in its devices. The regulator said that the tactic was intended to prevent rivals from becoming part of the iPhone supply chain.

While Intel eventually started delivering communications chips for the Apple iPhone 7 in 2016, it decided to exit the 5G modem business this year after Qualcomm and Apple reached a deal over Qualcomm's patent-licensing fees.

As part of the deal, Qualcomm was to receive between $4.5 billion and $4.7 billion from Apple in the third quarter of the financial year (ending June 2019). Apple is believed to be working on its own 5G modem, which could be launched by 2022.

In recent years, Qualcomm has also faced separate fines in South Korea and Taiwan. In the US, the company lost a legal battle in May, which was brought by the Federal Trade Commission.

In her ruling, the US District Court Judge Lucy Koh said that the company had violated antitrust rules by using its near-monopoly power to bully companies into overpaying for patent licences. The court also ordered Qualcomm to renegotiate its business deals and to license patented technology to rivals with reasonable terms.

The company was also barred by the court from signing exclusive deals with other smartphone makers, which prevent customers from purchasing modem chips from other firms.

Qualcomm is currently appealing against that ruling.

Meanwhile, earlier this week, the US Department of Justice requested the court to temporarily pause its antitrust ruling involving Qualcomm.

The Justice Department argued that the ruling by Judge Koh diminishes Qualcomm's competitiveness in 5G innovation and standard-setting, which could significantly impact US national security.