EU fines US chipmaker Qualcomm $1.2B over Apple exclusivity deal

BRUSSELS — US chipmaker Qualcomm, Inc. was hit with a €997-million ($1.23-billion) fine by European Union (EU) antitrust regulators on Wednesday for paying Apple, Inc. to use only its chips, blocking outrivals such as Intel Corp.

The EU decision is the latest in a series by global regulators that have amounted to billions of dollars in fines and require changes in Qualcomm business. The contract at issue with Apple is no longer in force, and Qualcomm already faces more competition from Intel and other rivals.

Still, the EU decision could make Qualcomm more vulnerable to chipmaker Broadcom Ltd.’s $103-billion hostile bid, since Broadcom argues it can smooth rocky relations with customers such as Apple..

Qualcomm said it would appeal the decision immediately.

The European Commission said its investigation, launched in 2015, covered the period from 2011 to 2016 and took into account Qualcomm’s market dominance in LTE baseband chipsets, which enable rapid mobile broadband connections.

“Qualcomm paid billions of US dollars to a key customer, Apple, so that it would not buy from rivals. These payments were not just reductions in price — they were made on the condition that Apple would exclusively use Qualcomm’s baseband chipsets in all its iPhones and iPads,” European Competition Commissioner Margrethe Vestager said in a statement.

“This meant that no rival could effectively challenge Qualcomm in this market, no matter how good their products were,” she said.

The fine represented 4.9% of Qualcomm’s 2017 turnover, the Commission said.

Qualcomm General Counsel Don Rosenberg said in a statement that the company believed its agreement with Apple did not violate EU rules. “We have a strong case for judicial review and we will immediately commence that process,” he said.

Qualcomm’s shares were down 1.35% at $67.42 in midday trade, and analysts saw the fine as good for Broadcom’s approach. —