Qualcomm charged Apple lower fees in order to get exclusivity for its chipsets, a complaint from the American Federal Trade Commission has claimed.
The US regulator is alleging Qualcomm used its market dominance to impose โonerous and anti-competitiveโ supply and licensing terms on smartphone makers, weakening the wider market.
Qualcomm said the complaint โis based on a flawed legal theory, lack of economic support and significant misconceptions about the mobile technology industryโ.
The first strand of the FTCโs complaint centres on what it described as Qualcommโs โno licence, no chipsโ policy, where baseband processors would only be supplied if smartphone makers agree to Qualcommโs licence terms.
The FTC alleged this means manufacturers would pay increased royalties to Qualcomm for products that used a rivalโs chipsets.
It said Qualcomm is the only semiconductor supplier to have this policy. The FTC said: โThe risk of losing access to Qualcomm baseband processors is too great for a cell phone manufacturer to bear because it would preclude the manufacturer from selling phones for use on important cellular networks.โ
Second, the FTC said Qualcomm is refusing to stand by commitments to licence standard-essential patents on fair, reasonable and non-discriminatory terms.
Finally, the regulator said, in exchange for reduced patent royalties, Qualcomm stopped Apple from getting baseband processors from its rivals between 2011 and 2016.
It said: โQualcomm recognized that any competitor that won Appleโs business would become stronger, and used exclusivity to prevent Apple from working with and improving the effectiveness of Qualcommโs competitors.โ
The regulator is seeking a court order to stop what it called โQualcommโs unfair methods of competitionโ and restore competitiveness.
In response, Qualcomm said it has never withheld or threatened to withhold chip supply to gain better licensing terms. It also criticised the timing, as the US government is about to shift to a new administration.
Don Rosenberg, Executive Vice President and General Counsel, Qualcomm, said: โIn our recent discussions with the FTC, it became apparent that it still lacked basic information about the industry and was instead relying on inaccurate information and presumptions.
โIn fact, Qualcomm was still receiving requests for information from the agency that would be necessary to an informed view of the facts when it became apparent that the FTC was driving to file a complaint before the transition to the new Administration.
โWe have grave concerns about the two Commissionersโ decision to bring this case despite a lack of evidence supporting the allegations and theories in the complaint. We look forward to defending our business in federal court, where we are confident we will prevail on the merits.โ