On Wednesday Qualcomm’s share experienced a fall by more than 12% in premarket trading after an announcement of judgement. The Federal Trade Commission (FTC) filed a case against Qualcomm in 2017. Now the judgement sided FTC. A U.S. federal judge ordered that the company has breached antitrust law. Judge Lucy Koh of the U.S. District Court, noted the chip maker has illicitly blocked rivalry. It has even charged unnecessarily huge licensing fees and royalties. Due to this only few competitors remained in the market for smartphone chips. As a result of the judgement, Qualcomm has to stop grouping patent license deals with its hardware. Besides, it must agree to offer patents on fair basis to other companies in the market.
In the judgement, the judge notes that Qualcomm’s licensing acts have obstructed the competition. The move has also affected competitors, other equipment manufacturers, and final users. Koh judged that the chip maker’s royalty rates were extremely high. She recommended Qualcomm to renegotiate licensing deals at appropriate prices. Also, the new agreements must not impose a risk to supplies. The company has to report its surveillance and compliance activities for the upcoming seven years to reveal its accordance. On the other hand, Qualcomm said it will request the fed judge to hold her judgement. The company intends to appeal the decision in the federal appeals court, California.
Don Rosenberg, the general counsel, said they highly disagree with the judge’s decision, her elaboration of the facts. The executive even revealed disagreement on Koh’s application of the law. While Koh referred to the statements from company executives revealed the illegal acts continue to happen and probably repeat. From the acts ordered, Koh said she would stop Qualcomm from differentiating or avenging by every means against any modem-chip supplier or consumer. Meanwhile, the chip maker tried to control the situation and said the smartphone market is in a good state and competitive. In the end, the FTC is one of the regulators to have sued the chip maker over its so-called anticompetitive practices. The company has paid fine in many other countries like China and South Korea.