U.S. Abandons Four-Year Antitrust Battle Against Qualcomm (1)

U.S. antitrust enforcers are abandoning their lawsuit against Qualcomm Inc. that accused the company of abusing its dominant position in chips that power smartphones.

The Federal Trade Commission said Monday it won’t seek a Supreme Court review of a federal appeals court decision last year that found Qualcomm’s practices weren’t anticompetitive.

The decision formally ends litigation that began in January 2017 when the FTC, in the closing days of the Obama administration, sued Qualcomm. The agency won at trial but the decision was reversed by a three-judge panel on the U.S. appeals court in San Francisco, which found Qualcomm’s aggressive competition didn’t amount to illegal behavior and credited the company for its “disruptive role” in cellular service. The full court declined to reconsider the decision.

FTC Acting Chairwoman Rebecca Kelly Slaughter, who wasn’t on the commission when the lawsuit was filed, said in a statement that although she agreed with the trial court decision that Qualcomm violated antitrust laws, the FTC is facing “significant headwinds” in trying to overturn the appeals court ruling.

“Now more than ever, the FTC and other law enforcement agencies need to boldly enforce the antitrust laws to guard against abusive behavior by dominant firms, including in high-technology markets and those that involve intellectual property,” she said.

Qualcomm said it was pleased with the agency’s decision.

“Qualcomm got to where it is today by investing tens of billions of dollars in R&D and inventing technologies used by billions of people around the world,” Don Rosenberg, Qualcomm’s general counsel, said in a statement. “Now, more than ever, we must preserve the fundamental incentives to innovate and compete.”

When it was filed, the Qualcomm case represented one of the rare examples of U.S. antitrust officials taking action to stop allegedly anticompetitive conduct by a major company to protect its dominant position in a market.

Since then, the FTC has sued Facebook Inc. in a case that seeks to break up the company, while the Justice Department filed a complaint Alphabet Inc.’s Google. Both cases accuse the companies of abusing monopoly power in violation of antitrust laws.

The antitrust case against Qualcomm threatened to undermine the company’s business model. The company gets the bulk of its revenue from selling chips, but the majority of its profit from licensing the thousands of patents it owns on technology that underpins how modern phone systems work.

The FTC accused Qualcomm of abusing its dominant position to extract excessive licensing fees from phone makers.

(Updates with Qualcomm statement, in seventh paragraph)

To contact the reporter on this story:
David McLaughlin in Washington at dmclaughlin9@bloomberg.net

To contact the editors responsible for this story:
Sara Forden at sforden@bloomberg.net

John Harney

© 2021 Bloomberg L.P. All rights reserved. Used with permission.