S.Korean apex court upholds record $761 mn fine on Qualcomm

Seoul, April 13

South Korea's Supreme Court on Thursday finalised a ruling in favour of the national antitrust regulator's record fine of 1 trillion won ($760.8 million) imposed in 2016 on US chipmaker Qualcomm for unfair business practices.

The fine was imposed by the Fair Trade Commission (FTC), which concluded in December 2016 that the San Diego-based company and its two affiliates breached South Korea's competition law by refusing to offer licenses to chipset manufacturers and demanding high fees for patents used by smartphone makers.

The agency had accused Qualcomm of abusing its dominant position in mobile communication markets, reports Yonhap news agency.

According to the 2016 findings by the FTC, Qualcomm came into owner status of standard essential patent (SEP) rights, deemed essential for mobile phone manufacturing, upon a "FRAND" commitment that requires Qualcomm to provide nondiscriminatory service of the patent rights.

But the chipmaker, in practice, either denied companies, such as Samsung or Intel, contracts or restricted their use of the patent rights by limiting sales channels.

The FTC also found Qualcomm abused its dominant position in the modem chipset market to force chipset buyers to purchase its patent rights on terms favorable to itself, consequently ordering the US chipmaker to take corrective measures on 10 accounts.

The top court upheld the Seoul High Court's previous ruling that sided with the FTC decision in a suit filed by Qualcomm to reverse the fine.

In its ruling in 2019, the Seoul High Court recognised eight of the 10 corrective measures ordered by the FTC as justifiable.

The appeals court at that time recognised Qualcomm's abuse of its dominant market power in forcing unfavorable business deals on mobile phone makers and unfairly restricting market competition. The 1.03 trillion won fine marks the biggest financial penalty the FTC has ever imposed so far.

The FTC welcomed the ruling, pointing out that it is significant that the court made it clear that "establishing an anti-competitive business structure despite being aware of fair, reasonable, and nondiscriminatory (FRAND) terms is a violation of law".

"The FTC plans to thoroughly monitor the implementation of the corrective order in line with the verdict," the regulator said in a statement.

"We plan to continue to take stern actions against activities that hinder competition, including the abuse of standard essential patents," it added.