Qualcomm sued over allegations of anti-competitive practices in mobile chip market

Qualcomm accused of abusing market power by US Federal Trade Commission

Qualcomm is being sued by the US Federal Trade Commission, charged with using anti-competitive practices in an attempt to squeeze rivals out of the market for smartphone baseband processors, which manage cellular communication in mobile devices.

The FTC claims (PDF) that the company abused its dominance in baseband processors by imposing anti-competitive supply and licensing terms on smartphone manufacturers, who couldn't buy the technology if they didn't agree to Qualcomm's terms.

"'No licence, no chips' is a condition that other suppliers of semiconductor devices do not impose," the FTC said. "The risk of losing access to Qualcomm baseband processors is too great for a cell phone manufacturer to bear because it would preclude the manufacturer from selling phones for use on important cellular networks."

According to the FTC, Qualcomm also made exclusive deals with Apple that exclude competitors and harm competition, so that it could supply the baseband chips for all iPhones from 2011 to 2016.

One accusation claims that Qualcomm in 2007 it got Apple to agree not to use Intel-backed WiMax, the original 4G system used on the Sprint network in the US.

"In all, Qualcomm's 2011 and 2013 agreements with Apple provided for billions of dollars in conditional rebates from Qualcomm to Apple," according to the complaint.

"Under these agreements, Qualcomm provided Apple large lump sum payments that constituted partial relief from Qualcomm royalties. Qualcomm conditioned this relief on Apple's exclusive use of Qualcomm baseband processors in new iPhone and iPad models."

The filing seeks to "order Qualcomm to cease its anti-competitive conduct and take actions to restore competitive conditions".

However, Qualcomm has denied the FTC's allegations, saying in a statement that "the complaint is based on a flawed legal theory, a lack of economic support and significant misconceptions about the mobile technology industry".

"Qualcomm has never withheld or threatened to withhold chip supply in order to obtain agreement to unfair or unreasonable licensing terms," it added. "The FTCs allegation to the contrary - the central thesis of the complaint - is wrong."

Last month, South Korea's antitrust agency fined Qualcomm $853m for allegedly violating the country's competition laws.