South Korea’s Supreme Court has affirmed the national antitrust regulator’s decision to impose a record fine of 1 trillion won ($760.8 million) on Qualcomm, a US chipmaker, for engaging in unfair business practices.
The Fair Trade Commission (FTC) imposed the fine in 2016 after concluding that Qualcomm and its two affiliates had breached South Korea’s competition law.
Specifically, Qualcomm refused to offer licenses to chipset manufacturers and demanded high fees for patents used by smartphone makers, thereby abusing its dominant position in mobile communication markets.
The FTC found that Qualcomm had come into ownership of standard essential patent (SEP) rights, which are necessary for mobile phone manufacturing, upon a “FRAND” commitment that requires nondiscriminatory service of the patent rights.
However, Qualcomm denied companies contracts or restricted their use of the patent rights by limiting sales channels.
The FTC found that Qualcomm had abused its dominant position in the modem chipset market to force chipset buyers to purchase its patent rights on terms favorable to itself. As a result, the FTC ordered Qualcomm to take corrective measures on 10 accounts, and 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 2019 ruling, the Seoul High Court recognized eight of the 10 corrective measures ordered by the FTC as justifiable. The 1.03 trillion won fine is the largest financial penalty the FTC has ever imposed.
The FTC welcomed the ruling, stating that it would closely monitor the implementation of the corrective order and take stern actions against activities that hinder competition, including the abuse of standard essential patents.