New legal setback for the EU Commission in a multi-billion dollar antitrust dispute: The Court of Justice of the European Union (EuG) has the decision of the Brussels government institution from 2018 to impose a fine of 997 million euros on the US chip manufacturer Qualcomm for violating competition rules several procedural errors declared null and void altogether. The Apple supplier does not have to pay the fine for the time being.
EU Commission complained about market abuse
EU Competition Commissioner Margrethe Vestager considered it proven that Qualcomm had paid Apple billions of dollars to prevent the iPhone maker from buying from competitors like Intel. As a result, challengers were illegally excluded from the market for so-called LTE baseband chipsets for more than five years. These ensure the wireless connection in many smartphones and tablets.
Qualcomm is considered the world’s largest supplier of such chipsets. According to the commission, in a 2011 agreement with Apple, the company committed to make “significant payments” for the producer to use only Qualcomm chipsets in its iPhones and iPads. In 2013, the agreement was extended until the end of 2016. The corresponding behavior was tantamount to the abuse of a dominant position.
The CJEU justified its judgment in Case T-235/18, which was announced on Tuesday, by arguing that the identified deficiencies would have affected Qualcomm’s rights of defence. Furthermore, the analysis of the anti-competitive effects of the incentive payments was incorrect.
Not all circumstances considered
The Luxembourg judges found, among other things, that the decision contested by Qualcomm referred solely to the market for 4G chipsets. However, the statement of objections also covered abuse in the UMTS (3G) area. Since such a change affected the relevance of the data on which the economic analysis was based in Qualcomm’s defense, the Commission should have given the accused company the opportunity to be heard and to react if necessary.
The Brussels executive body also “did not take all relevant factual circumstances into account” in its market analysis, the CJEU complained. For example, Apple had “no technical alternative to Qualcomm’s LTE chipsets” for the majority of its own needs in the relevant period, which mainly affected iPhones. The Commission’s assessment is therefore unlawful.
According to the judges, the remaining reference to the potentially reduced incentives for Apple to turn to Qualcomm’s competitors for 4G chips for iPads is not sufficient “to prove the anti-competitive nature of these payments for the entire needs” of the Cupertino group. Such a limited analysis cannot “cure” the lack of consideration of all relevant factual circumstances in the context of the general, in principle also not watertight, evidence of the Commission.
Second defeat for Brussels
The court also points out that the cartel watchdogs are obliged “to record the exact content of every conversation that took place to collect information about the subject of an investigation, in the form chosen by them”. In the present case, the Commission “did not fully comply” with this requirement, for example when holding meetings and telephone conferences with third parties.
The Brussels government institution can appeal the decision to the European Court of Justice (ECJ) within two months and ten days after it has been served. The European Court of Justice recently lifted the €1.06 billion antitrust fine imposed on Intel by the Commission in 2009. This is about discounts for computer manufacturers. In this dispute, the Commission already appealed at the beginning of April.
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