The Court of Justice of the European Union Upholds the Fine Imposed on Qualcomm for Abuse of a Dominant Position

Competition Law

In the press release published on its official website on 18 September 2024, the Court of Justice announced that the General Court (“Court”) sets the amount of the fine at approximately € 238.7 million as opposed to the € 242 million imposed by the Commission.

According to the press release;

  • Qualcomm is a US company established in 1985 operating in the field of cellular and wireless technologies. Qualcomm’s chipsets are sold (and its system software is licensed) to companies which use them in mobile phones, tablets, laptops, data modules and other consumer electronics.
  • On 30 June 2009, the British company Icera lodged a complaint with the European Commission against Qualcomm, revised and updated version on 8 April 2010, on the basis of which the Commission initiated its investigation. In 2012, the intervener, the US company Nvidia, which had acquired Icera in May 2011, supplied further information, supplementing the complaint and making allegations of predatory pricing against Qualcomm
  • Between June 2010 and July 2015, the Commission sent a number of requests for information to Qualcomm, Icera, Nvidia and other players in the baseband chipset sector. In the years following, the Commission finalised its investigation, making additional requests for information, sending statements of objections and organising hearings.

On 18 July 2019, the Commission adopted the contested decision, imposing a fine amounting to € 242 042 000 on Qualcomm;

  • The Commission defined the relevant market as slim and integrated baseband chipsets compliant with the Universal Mobile Telecommunications System (“UMTS”) standard. The Commission found that Qualcomm held a dominant position on that market at a worldwide level, at least from 1 January 2009 to 31 December 2011.
  • The Commission concluded that Qualcomm had abused its dominant position by supplying, during the relevant period, certain quantities of some of its UMTS chipsets to two of its key customers, namely Huawei and ZTE, below cost prices, with the intention of eliminating Icera, its main competitor at the time.
  • Qualcomm requested the Court to annul, or in the alternative, to reduce substantially the amount of the fine imposed and to that end raised fifteen pleas in law based in particular on procedural irregularities, including the excessive duration of the investigation, the alleged overly brief nature of certain notes taken during interviews not recorded by the Commission with third parties, manifest errors of assessment, of fact and of law, as well as a failure by the Commission to state reasons regarding many aspects of the decision in question.
  • In its judgment, the Court makes a detailed examination of all the pleas put forward by Qualcomm, rejecting them all in their entirety, with the exception of a plea concerning the calculation of the amount of the fine, which it finds to be well founded in part.
  • In particular, the Court rejects, amongst others, Qualcomm’s complaint that the Commission ought to have applied the ‘small but significant and non-transitory increase in price’ test in order to define the relevant market for the purposes of applying Article 102 TFEU, in so far as that test is not the only method which the Commission may use in order to define the relevant market.
  • As regards the Commission’s finding regarding the elimination of Icera from the market, the Court points out that, contrary to Qualcomm’s allegations, the Commission is not required, when examining whether an undertaking in a dominant position charged predatory prices, to examine whether the share of the market covered by the contested practice is of sufficient magnitude for that practice to have anticompetitive effects.
  • As regards the arguments that the ‘as-efficient competitor’ test was not applied on the relevant market, the Court observes that, in essence, in the context of an investigation into potential predatory prices, the analysis by which the Commission compares, as in the present case, the prices charged by an undertaking in a dominant position with some of its costs for the purposes of assessing whether that undertaking priced below average total costs but above average variable costs already includes an ‘as efficient’ competitor analysis.
  • Finally, as regards the calculation of the amount of the fine, the Court finds that, in the contested decision, the Commission departed, without justification, from the methodology laid down in its 2006 guidelines.
  • Therefore, in the exercise of its unlimited jurisdiction, the Court sets the amount of the fine imposed on Qualcomm at € 238 732 659.                                                                                     

You can reach further information here.

Kind regards,

Zumbul Attorneys-At-Law

info@zumbul.av.tr