Qualcomm is the latest US technology firm to come under the scrutiny of EU for possible antitrust activities. EU has initiated investigations on Qualcomm for using predatory pricing, i.e., pricing its products at a considerably low price than its competitors as a tactic to wipe competitors out of the market.
It has also claimed that Qualcomm may have used its leading market player position (by market share) to lure customers to use its chips exclusively in return of “financial incentives”.
We want to be sure that high-tech suppliers can compete on the merits of their products.
Margrethe Vestager, Europe’s top competition official, said in a statement on Thursday.
Many customers use electronic devices such as a mobile phone or a tablet, and we want to ensure that they ultimately get value for money.
In response, Qualcomm denied the claims calling them “concerns without merit” and said in an e-mailed statement to Reuters,
While we were disappointed to hear this, we have been cooperating and will continue to cooperate with the commission, and we continue to believe that any concerns are without merit.
As per the rules of EU, if found guilty, a firm may have to pay up to 10% of its global earnings which amounts to $26.5 billion (roughly Rs. 1,68,227 crores) for Qualcomm in the last financial year. Qualcomm may also have to change some of its business practices once found guilty.
In 2009, the American chip maker Intel also faced the similar charges of abusing its power to force customers to buy exclusively from them which resulted into a fine of $1.45 billion, the largest antirust penalty levied by the European Union.
It is noteworthy that in February this year, Qualcomm agreed to pay $975 to settle a similar antitrust case in China which had been going on for 14 months. Its licensing business also faced the investigation of US authorities in November last year.
EU’s tryst with US technological companies is a well-known one as companies like Google, Amazon, Apple, Starbucks, Master card have repeatedly come under its scrutiny over the past few years for antitrust, unethical business practices and tax issues.
It has often been said that American technological giants are frequently targeted by EU to give a chance to European companies to establish their presence and increase their business. However, European officials denied such claims saying that their investigations are not unfairly focussed on American companies.