The General Court of the European Union annulled the European Commission’s Violation Decision and Fine Imposed on Qualcomm
The General Court of the European Union ("General Court") annulled the decision of the European Commission ("Commission"), which found that Qualcomm, the world's largest LTE baseband chipset (“chipset”) supplier, had abused its dominant position in the said market and imposed a fine of €997 million.
In January 2018, the Commission had found that Qualcomm had abused its dominant position in the chipset market through an exclusivity agreement (“Agreement”) which excluded other suppliers from competition to supply chipsets to Apple, whose demand accounted for approximately one third of the demand for chipsets, Through the Agreement, Qualcomm had undertaken to make substantial payments to Apple in exchange for Apple's exclusive use of its chipsets in all iPhones and iPads, and it had been agreed that if Apple used chipsets supplied by Qualcomm's competitors, Qualcomm would withhold these payments and seek a refund of most of the amounts paid.
The General Court's annulment decision is primarily based on the finding that Qualcomm's right to a fair trial has been violated. The General Court found that the Commission had failed to inform Qualcomm of a series of interviews with third parties and failed to keep a proper record of these interviews. The General Court held that the Commission's findings and allegations relying on the content of these interviews were not proven or substantiated, and Qualcomm was not duly informed of the content of these interviews, causing the violation of Qualcomm’s right to defense.
The General Court considered that although the Commission was entitled to drop its allegations in relation to one of the markets under investigation, considering that the narrowing of the scope of the investigation affected and invalidated the parameters of Qualcomm's economic defense, the failure to give Qualcomm an opportunity to update its economic analysis violated Qualcomm's right to be heard as well.
The General Court also found the Commission's decision erroneous in terms of the analysis of anticompetitive effects. According to the General Court, given that Qualcomm was the only supplier capable of meeting Apple's scheduling and technical requirements, the General Court considered that the Commission had failed to prove that Qualcomm's conduct had an impact on Apple's preference of not changing its chipset supplier. Indeed, according to the General Court, even without the exclusivity payments, Apple would still have preferred buying the chipsets from Qualcomm.
The Commission may appeal the decision of the General Court to the Court of Justice of the European Union.
You may access the full English text of the decision of the General Court here.
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