Qualcomm Hit by EU Anti-Trust Fine Over Apple Contract
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Posted on 01/24/2018 11:34:21 AM PST by Swordmaker
One of the hardest things about being at the top of the market is staying there. Europe's antitrust regulators have accused Qualcomm of indulging in monopolistic practices by making payments to Apple, to help maintain its position as the world's largest maker of smartphone chips.
The European Competition Commission is fining Qualcomm 997 million euros ($1.2 billion), representing about 5% of Qualcomm's 2017 revenues, for making payments to Apple on the condition that it wouldn't buy the chips that run its iPhones from other competitors.
"Qualcomm illegally shut out rivals from the market for LTE baseband chipsets for over five years, thereby cementing its market dominance," said the EU's Competition Commissioner Margrethe Vestager.
"Qualcomm paid billions of U.S. dollars to a key customer, Apple, so that it would not buy from rivals. These payments were not just reductions in price – they were made on the condition that Apple would exclusively use Qualcomm's baseband chipsets in all its iPhones and iPads."
(Excerpt) Read more at forbes.com ...
Such exclusivity arrangements are quite normal, everyday business arrangements. There is normally no law that requires a business to do business with any business it does not want to do business with for any reason that it finds reasonable, including discounts.
There is a difference in providing a discount for being the exclusive supplier and paying billions in supposed kickbacks. A kickback is a payment to a broker, a neutral third party, who has alternatives that the third party could offer that unfairly damages the other parties the third-party is supposedly representing by accepting payments outside of the contract of sale to give one supplier an advantage the others do not have. Usually it comes from the supplier and does not pass through to the buyer as a discount. . . nor is it memorialized in the contract which then makes it a contractual discount usually tied to purchase levels.
Why not go after Apple - who accepted the payments?
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This is just another example of the EU trying to kick US companies for the sake of being US companies.
There is no European chip maker that may have benefitted from a competition standpoint against Qualcomm.
The EU competition committee doling out fines like this is a mix between the mafia protection racket and taxing without representation.
The deal was between US companies inked in the US and manufactured in Asia for world wide markets.
I fail to see how the EU fell in any purview in that chain from design, to parts sourcing to production.
“Why not go after Apple....”
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You’ve not been paying attention, the EU has been going after Apple on many fronts (e.g., taxes).
> Why not go after Apple - who accepted the payments?
Why not go after Apple - who solicited the payments?
There were no payments, only lower prices for Apple for the Qualcomm chips at a lower price for the future.
This is a SOCIALIST mis-construing of a normal business practice: i.e., providing a lower price in an guaranteed exclusive supplier arrangement, assuring for both sides a steady supply and a known source with future planned ramping up of production for new releases.
Yep.
The EU has attacked Intel, Microsoft, Google, Apple and Qualcomm.
All designed to protect EU companies who can’t compete in the global market.
I Trump and his team can find a way to fight back from this abuse, he will start an avalanche of High Tech moving away from the brink of current Socialism thought
Apple merely arranged a normal discount arrangement. . . something any business would do. This is a irrational socialist COMPETITION committee's response to how business is normally done doing a Monday morning quarterbacking approach in regulation. . . with regulation that really has no basis in law. . . by interpreting the law in a creative, socialist way. They, or the chairwoman, wants Apple to buy the chips "competitively" on the spot market which would have to be at a much higher price and would require making the iPhone's engineering more "flexible" (read less reliable) to accept many more makers' cellular and WIFI radios of various levels of quality, in the name of "open competition."
She wants a wide open free-for-all access of competition for parts similar to Android makers for the making of Apple products. She really has no clue how business is done. She apparently thinks that all parts are of equal quality and therefore interchangeable. . .just like people.
This is the same chairwoman who usurped the non-statutory authority over EU tax law (something that the Treaties that created the EU in the first place prohibited the EU from meddling in at ALL) to order Apple to pay Ireland $18 billion in back taxes, claiming that they'd created an unfair special arrangement for Apple although all business could take advantage of the same Irish tax law provisions and many did just that. Even Ireland took Apple's side in the dispute in court, arguing that their laws were not violated.
The EU Committee on Competition made up their authority to levy the tax. . . but that is what socialists do.
The EU bureaucracy is huge with ultra high pay and benefits. With billions in bills to pay for salaries and buildings. Obviously they are ripping off (fining) US corporations to pay for this. When was the last time a European corporation was fined this much? I know the EU bureaucrats have also fined other American tech firms billions.
The US should do the same to a few European corporations. Scalp ‘em!
They (EU) are misconstruing jack! This is theft covered with legal mumbo jumbo.
Qualcomm is not a Euroweenie company.
This is simply go after American money to pay for Euroweenie crap.
President Trump should impose a 500% tariff on all Euroweenie goods, to include cars, wine, fishing tackle, clothing, cosmetics and anything else manufactured in the sh!thole commonly known as Europe. List of countries to exempt: Austria, Poland and any others who want to stop Muz migration.
Sounds like good supply-chain management, to me...
Yes, dennisw, they are. I negotiated many such deal in my business career. It’s normal. You say to a supplier, if I agree to only by my widgets from you, will you agree to give me X% discount under market price and if my orders reach Y number within 12 months will you agree to rebate an additional 10% of that price? That is a perfectly normal and legal pricing structure. Nothing anticompetitive about it. It can be offered either way, too. The supplier can suggest the arrangement as well.
What’s being stolen under your claim? The discount? There is no third party diverting funds here.
Just to be clear. The thieves here are the EU bureaucrats. Stealing from Qualcomm to pay for EU salaries and operations. They are having a good laugh ripping off a US corporation.
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