After 17 months of investigation, the Fair Trade Commission of South Korea is set to fine Qualcomm up to 1 trillion won (around $900 million) for abusing its patents. The first verdict is slated to be revealed on the 20th of this month. If Qualcomm is found guilty, this will be the largest fine that the FTC has ever issued.
According to an FTC official, Qualcomm has apparently charged Korean manufacturers excessively high licensing fees, which violates the principle of fair market competition.
“Qualcomm has been collecting royalty fees from mobile phone manufacturers based on certain fixed rates from the suggested price of a mobile device,” said an FTC official speaking to The Korea Times. “Qualcomm should have sought royalty fees based on each chipset.” Basically, instead of collecting licensing fees only based on its CDMA-related patents, Qualcomm allegedly calculated the fees on the basis of the wholesale prices of the phones themselves.
It is reported that Qualcomm has unfairly collected 1 trillion won from Korean manufacturers like Samsung and LG each year. If Qualcomm is indeed guilty, it might result in somewhat of a controversy as Korea accounts for roughly 16 percent of Qualcomm’s sales last year. If you can recall, Qualcomm faced a similar fine in China last year.
What are your thoughts on this investigation? Let us know your thoughts in the comments below!