The General Court has issued its ruling in Case T-671/19 | Qualcomm v Commission. It reduced a European Commission-imposed fine of € 242 million to approximately € 238.7 million.
Qualcomm is a US company selling chipsets and licensing system software for use in mobile phones, tablets, laptops, data modules and other consumer electronics.
After a complaint by British company Icera, the European Commission started an investigation. In 2012, the US company Nvidia, which had acquired Icera, provided more information and accused Qualcomm of predatory pricing against Qualcomm. In 2019, the Commission imposed a fine of € 242 billion on Qualcomm.
The Commission defined the relevant market as slim and integrated baseband chipsets compliant with the Universal Mobile Telecommunications System (UMTS) standard. It found that Qualcomm held a dominant position on that market at a worldwide level, at least from 1 January 2009 to 31 December 2011. It concluded that Qualcomm had abused its dominant position by supplying, during the relevant period, certain quantities of some of its UMTS chipsets to two of its key customers, namely Huawei and ZTE, below cost prices, with the intention of eliminating Icera, its main competitor at the time.
Qualcomm requested the Court to annul, or alternatively, to reduce substantially the amount of the
fine imposed. It argued there were various procedural irregularities, including the excessive duration of the investigation, the alleged overly brief nature of certain notes taken during interviews not recorded by the Commission with third parties, manifest errors of assessment, of fact and of law, as well as a failure by the Commission to state reasons regarding several aspects of the decision in question.
The Court of Justice of the European Union has rejected Qualcomm’s arguments except for a plea concerning the calculation of the amount of the fine, which it finds to be well founded in part. In particular, the Court has rejected, amongst others, Qualcomm’s complaint that the Commission ought to have applied the ‘small but significant and non-transitory increase in price’ test to define the relevant market when applying Article 102 TFEU, in so far as that test is not the only method which the Commission may use to define the relevant market.
The Court also rejected Qualcomm’s criticisms regarding the cost benchmarks used by the Commission in its pricecost test, in so far as the cost benchmarks chosen were more favourable to Qualcomm and because the
Commission chose to determine whether Qualcomm intended to eliminate a competitor.
The Court also pointed out that, contrary to Qualcomm’s allegations, the Commission is not required, when examining whether an undertaking in a dominant position charged predatory prices, to examine whether the share of the market covered by the contested practice is of sufficient magnitude for that practice to have anti-competitive effects.
As regards the arguments that the ‘as-efficient competitor’ test was not applied on the relevant market, the Court observed that, in essence, in the context of an investigation into potential predatory prices, the analysis by which the Commission compares the prices charged by an undertaking in a dominant position with some of its costs to assess if that undertaking priced below average total costs but above average variable costs already includes an ‘as efficient’ competitor analysis.
When it came to Qualcomm’s intention to eliminate Icera from the market, the Court said that the Commission had substantiated that finding with both direct and indirect evidence.
However, when it came to the fine, the Court said that the Commission had departed, without justification, from its 2006 guidelines. So, the Court has reduced it to £238 million.
