Top court upholds record trillion-won FTC fine against Qualcomm

Korea’s top court upheld an antitrust ruling against Qualcomm Thursday, agreeing with the Fair Trade Commission decision to fine the U.S. chip company a record 1 trillion won ($761 million) for unfair business practice.

A Qualcomm sign is pictured at the Mobile World Congress in Shanghai, China, on June 28, 2019. [REUTERS]

Korea's top court upheld an antitrust ruling against Qualcomm Thursday, agreeing with the Fair Trade Commission (FTC) decision to fine the U.S. chip company a record 1 trillion won ($761 million) for unfair business practices.

Qualcomm accepted the ruling by the Supreme Court of Korea.

"Qualcomm appreciates the court's resolution of the matter, and we look forward to continuing to grow the company's long-standing commercial relationships with Korea and our partners here," it said in a statement.

The decision puts an end to a long-running legal battle between the company and the Korean regulator that began in 2016.

The FTC imposed a 1.03-trillion-won fine on Qualcomm and its two licensing and chip affiliates over three allegations in connection with the abuse of its dominant market position. It was the highest fine ever imposed by the agency.

It ruled that the company blocked patents essential for the making of modem chips to competitors, citing MediaTek, Intel and Nvidia as victims.

Other accusations include the violation of the fair, reasonable and non-discriminatory (Frand) agreement by forcing smartphone makers to accept unfavorable licensing conditions using its chip supplier status as leverage. The FTC found that the chip maker only supplied certain chip products to the licensees of its intellectual properties.

The affected smartphone makers include Samsung Electronics, LG Electronics, Apple and Huawei, according to the FTC.

Qualcomm requested in 2017 that the Seoul High Court issue an order stopping the FTC from imposing the fine and corrective measures. In its ruling in 2019, the high court recognized two charges brought by the FTC but turned down the third allegation about enforcement of cross-licensing.

The FTC welcomed the top court's decision.

"The ruling has significant implications because it made it clear that the action of establishing an anti-competitive business model to maintain or bolster a dominant position in the standard essential patent and modem chipset markets is illegal even though the dominant player is aware of the need to comply with the Frand agreement," it said in a statement following the announcement Thursday.

"Reflecting the court's result, the FTC will continue to monitor corrective measures in a stern manner and take a strict approach towards any anti-competitive business activities such as abusing position as a holder of standard essential patents," the agency said.

BY PARK EUN-JEE [park.eunjee@joongang.co.kr]