Visitors walk past the Qualcomm stand at the Mobile World Congress in Barcelona on February 24, 2014.ALBERT GEA/Reuters
EU Competition Commissioner Margrethe Vestager added Qualcomm Inc. to her growing list of fights with U.S. technology companies, saying the chipmaker may be abusing its market power to undercut competitors.
Qualcomm, the maker of chips that power most of the world's smartphones, may have deployed predatory pricing practices for certain chipsets and offered unfair rebates to customers in a bid to thwart competitors, the European Commission said Thursday as it started two probes into the company.
"We want to be sure that high-tech suppliers can compete on the merits of their products," Vestager said in a statement. "Many customers use electronic devices such as a mobile phone or a tablet and we want to ensure that they ultimately get value for money."
The commission, the antitrust agency for the 28-nation European Union, in 2009 dropped a four-year probe into the company that started after competitors complained the chipmaker was charging excessive royalties on patents.
"While we were disappointed to hear this, we have been cooperating and will continue to cooperate with the commission, and we continue to believe that any concerns are without merit," San Diego-based Qualcomm said in an e-mailed statement.
The investigations add to a growing list of EU cases targeting U.S. companies including Amazon.com Inc., Google Inc., Apple Inc., MasterCard Inc. as well as Hollywood studios.
No Waiting Vestager told EU lawmakers, minutes after announcing the Qualcomm probes, that she sees no need to wait to finish her current case against Google before filing new antitrust complaints against the search engine giant.
"If you operate in Europe, you have to play by European competition rules, whether you are European or foreign," Ricardo Cardoso, Vestager's spokesman, said at a press briefing in Brussels.
Pat Treacy, a competition lawyer specializing in intellectual property at Bristows LLP in London, said that the focus on rebates in the Qualcomm case harkens back to a case involving Intel Corp., which resulted in a record 1.06 billion– euro ($1.15-billion) fine in 2009.
"The proximity to the Intel judgment is particularly interesting, given that one of the limbs of the commission's investigating is the possibility of some form of loyalty or fidelity rebate," Treacy said. "This was the issue at the heart of the Intel case."
Graphics Chips Icera Inc., a maker of wireless chips, filed a complaint in 2010 against Qualcomm that's since been pending. Nvidia Corp., a maker of graphics chips, in 2011 bought Icera for $367-million to add radio processors needed in phones and tablets.
Nvidia said in May it will give up trying to make modem chips for mobile devices, abandoning a key element of its attempt to break into the smartphone market.
Nvidia is open to selling its Icera unit and will stop development of its modems, or chips that connect phones to cellular networks. The "wind-down" of the unit will be completed by the second quarter of fiscal 2016.
The commission has no deadline to finish such investigations and said the opening of the probes means it will "examine the cases as a matter of priority."