Qualcomm Seeks Antitrust Enforcement Delay, Ahead Of Appeal

Qualcomm has asked a federal court to postpone an antitrust order until it can file an appeal against the American ruling.

Last week US District Judge Lucy Koh in San Jose, California, ruled that Qualcomm illegally suppressed competition in the market for smartphone chips by threatening to cut off supplies and extracting excessive licensing fees from mobile manufacturers.

Her ruling came after the US Federal Trade Commission (FTC) accused Qualcomm in 2017 of violating antitrust law.

Appeal planned

“Qualcomm’s licensing practices have strangled competition” in parts of the chip market for years, harming rivals, smartphone makers, and consumers, Judge Koh wrote last week.

Judge Koh then ordered Qualcomm to renegotiate licensing agreements at reasonable prices, without threatening to cut off supplies, and ordered that it be monitored for seven years to ensure its compliance.

But Qualcomm is seeking a stay of execution, after Reuters reported that it plans to file an appeal that could take more than a year to wind through the courts.

The company has apparently not yet filed that appeal; but the firm has filed legal documents asking whether the ruling’s provisions can be put on hold temporarily as it plays out.

Qualcomm argued that it strongly disagrees with Koh’s ruling as it raised “serious legal questions” because, among other things, she excluded evidence after a March 2018 cutoff date – including the fact that Apple dropped Qualcomm in favour of rival chip supplier Intel Corp, showing that Qualcomm did not have a stranglehold on the market.

Qualcomm also alleged that the FTC’s theory in the lawsuit – that Qualcomm’s patent licensing practices amounted to a “tax” on smart phone makers, generating profits that Qualcomm then put to work undercutting its rivals – was unprecedented in antitrust law.

The mobile chip maker said if Judge Koh’s ruling was to stand, it would require it rework its license deals and even offer deals to rival chip suppliers. This would create such problems for the firm it would impossible to reverse things if it wins on appeal.

“After radically restructuring its business relationships, Qualcomm will not be able to return to its pre-injunction business in an orderly fashion,” the company was quoted as saying. “Nor will it be able to unwind licensing agreements it has renegotiated in the shadow of an order that is later overturned.”

If Koh rejects Qualcomm’s request to put the ruling on hold during the appeals process, Qualcomm will then ask the US Ninth Circuit Court of Appeals to put the ruling on hold.

Legal tussles

This is not the legal battle Qualcomm has faced. It was locked into a lengthy legal tussle with Apple that was turning increasingly bitter.

But last month Apple surprised many when it opted to end the battle, and the iPad maker also agreed to make an undisclosed payment to Qualcomm, and use its chips going forward.

Qualcomm has also been facing regulatory investigations around the world for a number of years now.

Regulators in South Korea, Taiwan, the EU and China have for example imposed fines on Qualcomm for its business practices.

The San Diego-based company produces the chipsets for many of the world’s leading smartphones and tablets.

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