The mobile chipmaker company, Qualcomm, is hit with an antitrust lawsuit by the Federal Trade Commission. The civil lawsuit was filed in California saying that the company has forced Apple to use its chips exclusively for iPhone from 2011 to 2016.

The lawsuit was filed in the District Court in Northern California by the FTC. It accused Qualcomm of anticompetitive tactics to ensure the monopoly of their chips questioning its patent royalty practices.

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Following the lawsuit, the shares of the company dropped 5.6 perfect, closing at $64.19 on Tuesday. But Qualcomm said that it has never threatened to withhold chip supply to obtain unreasonable licensing terms from any company. As well, it said that they rushed filing the complaint.

“In our recent discussions with the FTC, it became apparent that it still lacked basic information about the industry and was instead relying on inaccurate information and presumptions,” Qualcomm general counsel Don Rosenberg said in a released statement.

Qualcomm is forcing Apple to use its chips for their iPhones

Telecommunication equipment, Qualcomm is hit with a lawsuit for abusing its dominant position in the market of processors used in smartphones and other devices to establish a monopoly. The antitrust suit was filed in the federal court of California by the US Federal Trade Commission.

The San Diego-based company is the dominant provider of chips for smartphones, and therefore it is not the first time it is facing a suit for anticompetitive practices.

It was investigated by the European Union, Taiwan, and China.Last month it was fined with $850 million by South Korean enforcement regulators.  As well, in 2015 Qualcomm agreed to pay $975 million in China for antitrust charges, and $25.5 billion in Europe.

Last month it was fined with $850 million by South Korean enforcement regulators.  As well, in 2015 Qualcomm agreed to pay $975 million in China for antitrust charges, and $25.5 billion in Europe.

According to the civil lawsuit, Qualcomm blocks out other competitors such as Intel by forcing phone makers to sign an exclusivity agreement. Especially the controversy involves Apple.

The commission said that Qualcomm made Apple sign an agreement to use only its chips from 2011 to 2016. The FTC claimed that if Apple wanted to use Qualcomm’s rivals chip for the iPhones, it would lose out on the huge Qualcomm rebate payments.

“Qualcomm recognized that any competitor that won Apple’s business would become stronger, and used exclusivity to prevent Apple from working with and improving the effectiveness of Qualcomm’s competitors,” the FTC said in the suit.

Qualcomm: it is an extremely disappointing decision

Since the lawsuit was filed, Qualcomm’s shares have fallen 5.6 percent, closing at $64.19. The company refused the allegations made by the FTC.

It said it was extremely disappointing that they rush to file a complaint precisely on the eve of Chairwoman Ramirez’s departure and the transition to a new administration, which reflects a break from FTC practices.

It said that the central thesis of the suit is wrong because it is based on a lack of economic support and a misconception about the tech industry.

“The complaint seeks to advance the interests and bargaining power of companies that have generated billions in profit from sales of products made possible by the fundamental 3G and 4G cellular technology developed by innovators like Qualcomm.” stated the company.

But according to the FTC, the problem is that Qualcomm only supplies its processors on the condition that smartphone manufacturers agree to Qualcomm’s preferred license terms, preventing them from getting processors from any other company, creating thus a monopoly.

Source: International Business Times