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Korea Fair Trade fines Qualcomm $200M

Posted: 28 Jul 2009 ?? ?Print Version ?Bookmark and Share

Keywords:W-CDMA? CDMA? Qualcomm Korea suit?

The Korea Fair Trade Commission (KFTC) has found no violation with regard to much of the complaint against Qualcomm Inc., but stated that that certain discounts and rebates the wireless chip manufacturer provides to its Korean customers on the purchase of its CDMA chipsets are in violation of Korean competition law.

The decision by the KFTC includes a corrective order relating to the specific practices at issue and an administrative fine of approximately $200 million, however there is no indication of how this figure was calculated other than a reference to Qualcomm's significant Korean revenue. Additional details regarding the decision, including how the KFTC calculated the fine, will not be available until issued by the KFTC in the form of a written decision and order which may take several months.

Qualcomm said in a press release that the findings of violations are based upon serious factual and legal errors, and that its practices are lawful, appropriate and pro-competitive. Qualcomm also believes that the fine is excessive and unwarranted and plans to appeal the decision to the Korean courts and continue vigorously to defend itself against the claims of unlawful conduct.

"Qualcomm is pleased that, after an investigation of more than three years, the KFTC has decided that there was insufficient evidence to support the multimedia integration claims and that the KFTC rejected all claims relating to conduct regarding W-CDMA," said Donald J. Rosenberg, executive VP, general counsel and corporate secretary of Qualcomm. "However, the decision appears to have ignored or discounted evidence presented by Qualcomm and its Korean customers that demonstrates that Qualcomm's business practices in Korea have been lawful, highly beneficial to its customers and the Korean wireless industry, and pro-competitive."

Rosenberg added that the company is proud of the long-standing, mutually-beneficial relationships it has enjoyed with the Korean wireless industry. "The discounts and rebates which have been characterized as violating competition law were put in place for the benefit of Korean handset manufacturers. Indeed, our close strategic relationships with Korean wireless handset manufacturers have helped two of our Korean customers join the ranks of the top five suppliers of wireless devices worldwide. We will continue to work with our Korean customers to enable their continued success in the worldwide wireless market," he said.

Qualcomm has been a key supporter of the development and commercialization of the wireless industry in Korea. The company's advanced technologies have helped propel our Korean customers to join other licensees as leading suppliers of CDMA equipment and other technologies worldwide. This has resulted in wireless products becoming one of the largest categories of exports from Korea. Since the early 1990s, the company has worked closely with Korea's Electronics and Telecommunications Research Institute and Korean manufacturers to help establish Korea as a global leader in wireless technology, grow the wireless market and bring the benefits of technology innovation to consumers in Korea and worldwide.

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