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European Commission to investigate Qualcomm
Following the recent rejection of Microsoft's appeal against the European Commission's 2004 charges of anti-competitive behaviour, the Commission decided on 1st October 2007 to open a formal investigation into the behaviour of San Diego chipset manufacturer Qualcomm Incorporated, as a matter of priority. The investigation follows a number of complaints alleging that it is abusing its dominant position with regard to its ownership of intellectual property rights in mobile telecommunications standards, contrary to European competition law.
The intellectual property rights in question relate to the Code Division Multiple Access (CDMA) and Wideband CDMA (WCDMA) standards which are used in telecommunications. The WCDMA standard forms part of the Third Generation (3G) standard for European mobile phone technology, which is standardized by the 3rd Generation Partnership Project (3GPP). Anyone wishing to manufacture mobile phone technology in Europe that is compliant with this standard must therefore have an appropriate licence from Qualcomm.
The complaints from both mobile phone manufacturers and chipset manufacturers allege that Qualcomm's licensing terms and conditions are not Fair, Reasonable and Non-Discriminatory, requirements known as FRAND obligations which are imposed on companies by Standards Setting Organisations. The economic principle underlying a FRAND obligation is the prevention of exploitation of a market position by a company which has patented technology incorporated into the industry standard.
It has been alleged that as a result of the charging of non-FRAND royalties, consumers may be forced to pay higher handset prices, and that development of the 3G and 4G standards may be inhibited, as well as there being negative impacts on the standard setting process more generally.
The investigation will focus on whether Qualcomm's position is dominant, and whether the FRAND obligations have been breached. There is no indication at present as to when a decision will be reached by the Commission, but we will report the results of the investigation on this website as soon as they are published.
More information can be obtained from the Commission's press release relating to this investigation. Please contact us if you require any further information.
