Qualcomm says Korean fine is inconsistent with facts and law
Staff Writer |
The Korea Fair Trade Commission (KFTC) announced that it has reached a decision in its investigation of Qualcomm Incorporated, finding that certain of the company’s business practices are in violation of Korean competition law.
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The KFTC announced that it intends to issue a corrective order relating to the specific practices at issue and impose an administrative fine of approximately 1.03 trillion South Korean Won (approximately $865 million at current exchange rates).
This is an unprecedented and insupportable decision, the company says, relating to licensing practices that have been in existence in Korea and worldwide for decades and that the KFTC reviewed but did not question in a previous investigation of Qualcomm.
Additional details regarding this decision will not be available until the KFTC issues a written decision and order, which in prior cases has typically taken four to six months. The KFTC’s decision will not become effective until the written decision and order is issued.
Following receipt of the KFTC’s written order, Qualcomm will file for an immediate stay of the corrective order and appeal the KFTC’s decision to the Seoul High Court.
In addition, Qualcomm will also appeal the amount of the fine and the method used to calculate it. However, Qualcomm will be required to pay the fine within 60 days of the issuance of the written order, subject to possible adjustment or refund as part of the appeal process.
Qualcomm strongly disagrees with the KFTC’s announced decision, which Qualcomm believes is inconsistent with the facts and the law, reflects a flawed process and represents a violation of due process rights owed American companies under the Korea-U.S. Free Trade Agreement (KORUS).
The company said that the decision:
- Lacks a coherent theory of competition law violations
- Lacks any evidence of harm to competition, which is robust among chip and handset suppliers in part because Qualcomm’s business model promotes competition;
- Results from a denial of procedural safeguards guaranteed to American companies under KORUS, including the right to have complete access to evidence and the right to cross examination at the hearing;
- Seeks to disrupt established licensing practices that have been accepted by the wireless industry and used by major patent holders for decades, including Korean companies and government institutions like ETRI, Samsung and LG;
- Undermines incentives to invest in fundamental technology and share it with the industry; and
- Imposes a fine that is insupportable and not reasonably related to the size of the Korean market. ■