All's fair in love and war and high-stakes international B2B sales. Wait, that's not true: there's actually quite a lot of regulation on that last bit. Just ask the Korean Fair Trade Commission, which presented American chipmaking giant Qualcomm with a gigantic fine for unfair business practices on Wednesday. According to the KFTC, Qualcomm abused its dominant business position to force its manufacturing partners to pay exorbitant patent licensing fees when selling its widely-used mobile modem chips.
The KFTC is charging Qualcomm $854 million, the largest fine of its kind ever issued by the Commission according to Reuters. Qualcomm is accused of both forcing unnecessarily broad licensing agreements on manufacturers (for example, making a customer pay to license 20 patents when the actual part it's using only needs five) and refusing to license some patents to competitors like Intel, Samsung, and MediaTek, leaving them liable for patent lawsuits. Qualcomm is being ordered to renegotiate affected chip orders and operate "in good faith" with competitors going forward.
The investigation began in 2014, after complaints to the KFTC from unnamed sources. Apple, Intel, MediaTek, and Huawei were among the companies questioned during the deliberation process. Qualcomm's response to the judgement and fine is predictable: in a lengthy official statement, the company said it's filing for an immediate stay of the order, an appeal to South Korea's High Court, and an appeal of the amount of the fine and the methods used for its tabulation. There's the hat trick.
It will be several months before the KFTC issues its final statement on the investigation, after which Qualcomm will have 60 days to pay up, assuming its appeals are unsuccessful. With a sizeable portion of the mobile industry concentrated in South Korea, the outcome could make a major impact on pre-sale expenses for manufacturers.
Image source: iFixit