Qualcomm could be hit with a KRW1 trillion ($879 million) fine by South Korea’s Fair Trade Commission (KFTC), which has been investigating the company for 17 months to see if it breached anti-trust regulations.
“Qualcomm’s business model is still controversial because it charges excessively high licensing fees and requires unfair conditions for use of its patents,” The Korea Times quoted a KFTC official as saying.
The regulator will wait for a response from Qualcomm and then decide how much the fine will be. It wants to close the case by the end of the year.
If the fine is in fact KRW1 trillion, it would be the largest ever issued by KFTC. It fined Qualcomm more than $200 million in 2009 for anti-competitive behaviour.
The latest investigation was launched in February 2015 after complaints were filed against the company, accusing it of collecting very high royalties from its Korean partners for using the firm’s standard essential patents.
The KFTC said Qualcomm, the largest maker of chips for smartphones, collects a royalty on nearly every smartphone produced, whether or not the handset has its chips.
Qualcomm made about $7.57 billion last fiscal year in royalties from licensing its patents and other IP. According to The Korea Times, it collects $1.27 billion from Korean device manufacturers such as Samsung and LG Electronics every year and the country accounted for 16 per cent of its total sales last year.
Qualcomm, for its part, said it has played a big role in helping Korean device makers become some of the most competitive players globally.