A legal spat between LG Electronics and Qualcomm could significantly impact the South Korean manufacturer’s devices business, Reuters reported.
LG made a filing with US courts noting that as it tries to negotiate a new deal, Qualcomm is trying to “put a sweeping US antitrust decision against it on hold”. This would force the smartphone maker into signing another deal on less favourable terms.
Reuters stated LG’s existing deal runs until 30 June and it effectively has no choice but to conclude a deal on Qualcomm’s terms because it relies on the San Diego company’s modem chips.
The FTC made a ruling in May stating Qualcomm had engaged in anticompetitive practices to secure deals in its favour. The watchdog called for Qualcomm to renegotiate licensing deals and submit to compliance monitoring.
In return, Qualcomm filed for a stay on enforcement, because it could suffer irreparable harm should it subsequently be successful on appeal.
The FTC argued against the delay on enforcement because an appeal of the ruling could take years, during which time vendors renewing contracts could find themselves with a weaker deal.
The dispute is significant for LG, which relies on Qualcomm processors for its devices, including its first 5G smartphone, V50 ThinQ 5G. The consumer electronics giant’s smartphone business is already troubled: it is loss-making and has struggled in the face of tough competition, despite having offered a number of solid smartphones.
While LG is the first to face the issue due to the timing of its contract renewal, other device makers are likely to face similar challenges when it comes time to renegotiate with Qualcomm.