South Korea's antitrust regulator fined Qualcomm 1.03 trillion won ($854 million) for "unfair business practices in patent licensing and modem chip sales," a decision the U.S. chipmaker said it will challenge in court.
The Korea Fair Trade Commission (KFTC) ruled on Wednesday Qualcomm abused its dominant market position and forced handset makers to pay royalties for an unnecessarily broad set of patents as part of sales of its modem chips.
Qualcomm also restricted competition by refusing or limiting licensing of its standard essential patents related to modem chips to rival chipmakers such as Intel, Samsung Electronics and MediaTek, the regulator said, hindering their sales and leaving their products vulnerable to lawsuits.
The regulator ordered Qualcomm to negotiate in good faith with rival chipmakers on patent licensing and renegotiate chip supply agreements with handset makers if requested - measures that would affect the U.S. firm's dealings with major tech companies including Apple, Intel, Samsung and Huawei Technologies if upheld.
Foreign companies including Apple, Intel, MediaTek and Huawei expressed their views during the regulator's deliberation process, KFTC Secretary General Shin Young-son told a media briefing in the country's administrative capital.
"This is an unprecedented and insupportable decision relating to licensing practices that have been in existence in Korea and worldwide for decades and that the KFTC reviewed but did not question in a previous investigation of Qualcomm," Qualcomm said.
The KFTC's decision will not become effective until the written decision and order is issued, Qualcomm will file for a stay of the corrective order and appeal the KFTC's decision to the Seoul High Court. In addition, Qualcomm will also appeal the amount of the fine and the method used to calculate it. However, Qualcomm will be required to pay the fine within 60 days of the issuance of the written order, subject to possible adjustment or refund as part of the appeal process.
Qualcomm "strongly disagrees" with the KFTC's announced decision, which Qualcomm believes "is inconsistent with the facts and the law, reflects a flawed process and represents a violation of due process rights owed American companies under the Korea-U.S. Free Trade Agreement (KORUS)."
The fine is the latest in a series of antitrust rulings and investigations faced by Qualcomm from regulators across the globe. In February 2015, Qualcomm paid a $975 million fine in China following a 14-month probe, while the European Union in December 2015 accused it of abusing its market power to thwart rivals.
The KFTC fined Qualcomm 273 billion won in 2009 for abusing its dominant position in CDMA modem chips, which were then used in handsets made by Samsung and LG.
Regulators in other jurisdictions, including the United States and Taiwan, are also investigating Qualcomm.