Japan to order Qualcomm to stop abusing market dominance in violation of antitrust law

By Tomoko A. Hosaka, AP
Monday, July 27, 2009

Japan to order Qualcomm to stop unfair practices

TOKYO — Qualcomm Inc. has been notified that Japanese regulators plan to order the U.S. wireless chip maker to stop abusing its market dominance in violation of antitrust law, an official with the Fair Trade Commission said Monday.

The commission will cite contracts that give Qualcomm unfair advantages over Japanese mobile phone makers, according to several local newspaper reports. Some agreements, for example, restrict Japanese companies from filing a complaint even when they believe Qualcomm has infringed on patent rights, the Asahi daily said.

The Fair Trade Commission has alerted Qualcomm of its intent but has not officially announced the impending order, said the official, who confirmed the newspaper reports. He asked not to be named because of department policy.

Qualcomm was not immediately available for comment.

Last week, South Korea’s fair trade regulator slapped California-based Qualcomm with a record 260 billion won ($208 million) fine over what it said was abuse of market dominance.

The Korea Fair Trade Commission, which had been investigating Qualcomm since 2006, said the company abused its dominant position in CDMA mobile phone chips by charging higher royalties for companies that used rival chipsets. It also said that Qualcomm favored customers who used its products by offering rebates.

In a statement Thursday, Qualcomm vowed to fight the decision and called the fine “excessive and unwarranted.”

Qualcomm developed CDMA, or code division multiple access, a rival standard to the dominant cellular standard GSM, or global system for mobile. The company controls most of the key patents.

CDMA is used in the United States, South Korea and Japan.

Qualcomm, which licenses technology for mobile phones and manufactures semiconductor chips that run them, earns money by licensing the CDMA technology to other chip makers, handset manufacturers and wireless technology companies.


AP Business Writer Kelly Olsen contributed to this report.

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