European justice annuls a fine of one billion euros imposed on Qualcomm

In 2018, the European Commission imposed a heavy fine of 997 million euros on Qualcomm, for abuse of a dominant position. Qualcomm was accused of having paid billions of dollars to Apple so that it does not source LTE chips from competitors.

“Qualcomm’s behavior has deprived consumers and other businesses of expanded choice and greater innovation at a time when the industry is characterized by high demand and potential for innovative technologies. This practice is illegal under EU rules on anti-competitive practices”said Commissioner Margrethe Vestager, in charge of competition policy.

But the court of the European Union saw things differently. And this week, it swept aside the decision taken four years ago by the European Commission.

European justice cancels, by its judgment, the entire decision of the European Commission, including the fine of nearly one billion euros which had been imposed. According to the court, the European Commission committed irregularities which affected Qualcomm’s rights of defense, but also referred to its analysis of the effects on competition of these “incentive payments” by Qualcomm.

According to the court, the European Commission did not respect the obligation “to record, in the form of his choice, the precise content of any interview carried out with a view to collecting information relating to the subject of an investigation”. He also mentions the fact that the Commission’s decision only concerned the LTE chip market, whereas the statement of objections also referred to an abuse of the UMTS chip market.

For the court, “to the extent that such a modification of the complaints had an impact on the relevance of the data on which Qualcomm’s economic analysis was based aimed at challenging the ability of its behavior to produce foreclosure effects, the Commission should have placed it able to be heard and, if necessary, to adapt its analysis. »

Did Qualcomm really harm the competition?

In addition to these procedural problems, the conclusions of the European Commission are also called into question. The court relies, for example, on the fact that Apple had no other alternatives to source LTE chips for most of its needs, and in particular for the iPhone.

Also, the court “concludes that the Commission’s analysis was not carried out in the light of all the relevant factual circumstances and that it is therefore vitiated by illegality. »

He also explains that the conclusions of the European Commission, according to which the payments in question would have led Apple not to turn to the competition, are not enough.

« […] in any event, the Commission did not develop an analysis to support the conclusion that the payments concerned had actually reduced Apple’s incentives to turn to Qualcomm’s competitors to source LTE chipsets for certain iPad models to launch in 2014 and 2015 »the press release concludes.

Of course, this is a crushing defeat for the European Commission, which could be more hesitant to sanction the tech giants. But it can still appeal to the Court of Justice of the European Union.

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