South Korean fair trade regulator slaps Qualcomm with record $208 million fine

South Korean regulator fines Qualcomm record $208M

SEOUL, South Korea — South Korea’s fair trade regulator slapped U.S. chip maker Qualcomm Inc. with a record fine Thursday over what it said was abuse of its market dominance.

The Korea Fair Trade Commission said in a statement that it fined the San Diego, California-based company 260 billion won ($208 million), the largest such levy in South Korea.

The commission, which had been investigating Qualcomm since 2006, said the company abused its market dominance 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.

The commission also ordered Qualcomm to correct the practices.

A Qualcomm spokesman in Seoul reached by telephone referred comment to the company’s San Diego headquarters.

South Korea’s Yonhap news agency quoted the president of Qualcomm’s South Korean operation as calling the commission’s decision “very regrettable.”

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 and South Korea. Every handset in South Korea has a CDMA chip and manufacturers of handsets have to pay royalty fees to Qualcomm.

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.

The previous highest fine was one of 113 billion won slapped on a South Korean telephone operator in 2005, the commission said.

The fine on Qualcomm was far larger than one of 32.5 billion won that the commission handed to Microsoft Corp. in 2006 for abusing its dominant market position by tying certain software to its Windows operating system.