"The fine represents 4.9% of Qualcomm's turnover in 2017."
"In accordance with the Commission's 2006 Guidelines on fines (see press release and MEMO) the fine has been calculated on the basis of the value of Qualcomm's direct and indirect sales of LTE baseband chipset in the European Economic Area (EEA). The duration of the infringement established in the decision is five years, six months and 23 days."
Qualcomm made 122.5 billion in the last 5 years[2]. Making them pay 1% of that for breaking the rules isn't what I would call "taking this hard stance on antitrust".
Maybe you didn't mean it that way, but
I don't think it's healthy for a democracy to talk about politicians with such a negative undertone.
If there are too many black sheep, it's not the fault of "the politicians", it's the fault of the public for not voting for the alternative or being the alternative.
The main takeaway I got was that they have different views on what is a monopoly and how/when it is bad. From the article:
> The different outcomes hinge in part on different approaches. European regulators are more likely to see a shrinking pool of competitors as inherently bad for both competition and consumers. American regulators are more open to the possibility that it could be natural and benign.
> Side-note: As a Dane, so weird seeing Margrethe Vestager so prolific in this, used to seeing her as one of the usual politicians.
Maybe you should rethink your judgement of "usual politicians".
Never forget that they always, and inevitably, try to balance competing (yet valid) interests: issues where the answer is obvious almost by definition don't get to be "political"[0].
Any time you read about a political debate and think "why are they so stupid? Just..." it's highly likely that your neighbor one door down is muttering the same, only with an opposing answer.
[0]: US is exempt from this rule, because about half of the citizen and politicians have long gone off the deep end.
Hypothetically, what would happen if Qualcomm refused to pay the fine?
They are an American company. Presumably all the executives live in America. Could the EU put out an arrest warrant on them and hope the US extradites them? Could the EU then refuse to allow Qualcomm to sell anything within the EU? Would this mean Apple could then not sell any iPhones in the EU?
Qualcomm has enough assets in the EU to cover the fine. So if they don't pay, some legal process will start grinding, and at the end of that, the police will show up and take enough of these assets to cover the fine.
You really don't want to do this, who knows what they will
take. It could be something that is important for running the company and this could wreak a lot of havoc.
They could start by adding a daily-fine for each day they don't pay the fine; then interest on top. Then, you can imagine all smartphones with a Qualcomm chipset suddenly being banned from a 510M+ people market. All companies in Europe being barred from doing any business with Qualcomm; all Qualcomm IP nullified in Europe. Imagine having any of your officials not being able to travel inside Europe and cross-extradition countries, forever. The list goes on.
This is a favorite fantasy of what would today be called the "America First" movement.
In reality, the EU is world's largest economy, with about 20% of world GDP. It is also under the "rule of law", even more than the US by some measures.
In such a society with a long history of democracy and judicial independence, it is almost by definition impossible for a company to be ruined by government action unless it commits universally-recognised crimes (fraud, corruption etc.) or its business by nature entails equally recognized negative external effect (tobacco, environmental damage,...).
Because of the undertone possibly hinting at nationalistic motives (i. e. Europe harming a foreign competitor for its own business' benefit), I'll also point out that fines by the EU have historically tracked almost perfectly with the relative size of world regions' activity in the EU. In other words: European companies make up, say, 60% of the European market, and are also hit with 60% of the total fines.
The only divergence from this correlation has actually been a slightly lower number and amount of fines against US companies, and slightly higher enforcement actions against Asian companies. I believe this is most likely caused by the US' own national enforcement (and, as a result, corporate governance) being in better shape than Asia's.
IANAL but I would expect EU antitrust law is a civil matter, not penal, so no, jail would be off the table. The EU has no police corps and no real "law" - it emanates resolutions that countries then turn into laws, and provides a location where treaties can be signed. Some of these laws and treaties define certain specific roles for certain EU authorities.
This is why the EU Commission will only ever emit "fines" and "sanction infractions", rather than prosecuting this or that person.
This said, the usual procedure is to perpetuate and escalate fines: they will fine you the first time, and if you keep misbehaving they will fine you pretty much every year, plus compounded interest of course. If you don't pay, they can ask specific countries to act and freeze or requisite your assets, or worse - depending on the laws of the specific country. Countries can (and occasionally do) choose to ignore these demands, but it would result in sanctions against the country, which are directly taken out of payments from the EU budget (for infrastructural work, education etc etc). This is, incidentally, why Ireland is forced to abide by the tax ruling on Apple: if they don't, EU funds will dry up until the whole sum is repaid.
In the worst-case scenario, the EU Commission could emit a directive banning all products from Qualcomm in the EU market, and let fines spiral into the trillions, but somehow I don't expect this will actually happen.
In the event of willful refusal to pay, is there any provision by which the EU could "seize" (invalidate) a portion of Qualcomm's patent portfolio, which would constructively destroy their monopoly position?
That's the narrative Apple told every regulators, but Qualcomm's is very different.
According to Qualcomm's countersuit, Qualcomm did not demand that exclusivity first. It was Apple who proposed "discount" or "rebates" in exchange for the exclusivity and Qualcomm acquiesced to Apple's demand. Apple then turned around started telling regulators all around the world that Apple was FORCED to sign the exclusivity. Qualcomm was not allowed to directly counter Apple's claims, unlike US lawsuits, and Qualcomm's only recourse was to withhold the $1B rebate in breach of their business agreement -- their agreement forbids Apple from giving false testimony about their contract to regulators. I'm fairly sure that EU's findings are similar to those of China, Taiwan and Korea.
Qualcomm's anti-competitive baseband licensing was well known before and I think Qualcomm got dinged for the right reason. But Apple's claims are directly countered by Qualcomm and, given Apple's past problem with GTA and other suppliers and unless there are other victims of Qualcomm's "exclusivity" agreement -- I'm inclined to believe Qualcomm was tricked by Apple's clever lawyers.
>How do you structure an agreement to be even a tiny bit plausible?
They don't have to. They do whatever the hell they want and know they'll have to pay some tiny amount of their exorbitant profits to the EU for it. And even that they try to drag out as long as possible. (The article also mentioned Intel dragging out paying a fine for 9 years now)
I'm pretty sure these sorts of fines are already factored into their business plan.
I’m not sure I understand how this is a bribe. I think of a bribe as an individual personally taking a cut or kick back to influence the decisions of an organization. Two organizations agreeing to buy from each other exclusively for some period of time sounds like... a contract. If the agreement came in the form of bulk pricing instead of a balloon payment would it make a difference to the court? How is that functionally different from what happened?
It was Apple who proposed the rebates in exchange for exclusivity. Qualcomm acquiesced to Apple's demand. Apple then turned around told every regulators that Apple was FORCED into that exclusivity.
This is especially interesting, because I remember that the Intel chipsets in iPhones and iPads have had problems in LTE performance comparisons. So, Intel was losing to their competitor some time anyway, but still Qualcomm somehow needed to oil their marker shares growth. Why such aggressive competition?
The main question is why US does not fine Qualcomm over such fiasco? This is anti-competitive behavior from Qualcomm. what ridiculous market would we have if this kind of behavior would continue.
I'm trying to figure out if I feel Apple was in the wrong also. On the one hand they seem complicit in keeping other LTE vendors down. But on the other hand, why would you not take the deal? Someone is supplying you all the LTE chips you need and a bucket of cash. That's good for business.
Apple, being Qualcomm's customer, would seem to actually be the injured party here.
There's some debate in this thread about Apple actually coming up with the idea for exclusivity, but I'm not sure if that's actually relevant.
Analogy: The town's only supermarket is outrageously expensive. You tell the owner "give me $100 per month for the next 10 years, and I'll never go to another shop", because you can't get to another shop anyway and need to somehow lower food prices.
Then, 10 years later, a second store opens, you've started to grow your own potatoes, and you can actually risk ruining your relationship to the shop owner by telling the authorities that they have been gauging everyone.
Small reminder: Both Intel and Microsoft haven't paid a single Euro of their previous record ~1B antitrust fines yet.
Not to mention Intel also hasnt yet paid AMD >$1B restitutions for directly bribing distributors and system integrators to drop its competitor from inventory.
Exclusive deals are anti-competitive ? Would Microsoft be fined for reaching an exclusive agreement with Nokia to sell their only Windows Phones ? Would Google be forced to make and sell Windows phones ? I thought violating anti-competitive laws required one party to cross-subsidize, use advantages in one field/area to drive out competition in another
> I thought violating anti-competitive laws required one party to cross-subsidize, use advantages in one field/area to drive out competition in another
No. See Article 102 TFEU [1]. Abuse of a dominant market position in order to distort or avoid competition can take many forms.
[+] [-] Tehnix|8 years ago|reply
Side-note: As a Dane, so weird seeing Margrethe Vestager so prolific in this, used to seeing her as one of the usual politicians.
[+] [-] teamhappy|8 years ago|reply
"The fine represents 4.9% of Qualcomm's turnover in 2017."
"In accordance with the Commission's 2006 Guidelines on fines (see press release and MEMO) the fine has been calculated on the basis of the value of Qualcomm's direct and indirect sales of LTE baseband chipset in the European Economic Area (EEA). The duration of the infringement established in the decision is five years, six months and 23 days."
Qualcomm made 122.5 billion in the last 5 years[2]. Making them pay 1% of that for breaking the rules isn't what I would call "taking this hard stance on antitrust".
[1]: http://europa.eu/rapid/press-release_IP-18-421_en.htm [2]: https://www.statista.com/statistics/737780/revenue-of-qualco...
[+] [-] fwdpropaganda|8 years ago|reply
[+] [-] konschubert|8 years ago|reply
Maybe you didn't mean it that way, but I don't think it's healthy for a democracy to talk about politicians with such a negative undertone.
If there are too many black sheep, it's not the fault of "the politicians", it's the fault of the public for not voting for the alternative or being the alternative.
[+] [-] kyrra|8 years ago|reply
https://www.wsj.com/articles/the-antitrust-case-against-face...
The main takeaway I got was that they have different views on what is a monopoly and how/when it is bad. From the article:
> The different outcomes hinge in part on different approaches. European regulators are more likely to see a shrinking pool of competitors as inherently bad for both competition and consumers. American regulators are more open to the possibility that it could be natural and benign.
[+] [-] matt4077|8 years ago|reply
Maybe you should rethink your judgement of "usual politicians".
Never forget that they always, and inevitably, try to balance competing (yet valid) interests: issues where the answer is obvious almost by definition don't get to be "political"[0].
Any time you read about a political debate and think "why are they so stupid? Just..." it's highly likely that your neighbor one door down is muttering the same, only with an opposing answer.
[0]: US is exempt from this rule, because about half of the citizen and politicians have long gone off the deep end.
[+] [-] kawsper|8 years ago|reply
[+] [-] jpkeisala|8 years ago|reply
[+] [-] unknown|8 years ago|reply
[deleted]
[+] [-] weavie|8 years ago|reply
They are an American company. Presumably all the executives live in America. Could the EU put out an arrest warrant on them and hope the US extradites them? Could the EU then refuse to allow Qualcomm to sell anything within the EU? Would this mean Apple could then not sell any iPhones in the EU?
Just curious how such a scenario could pan out..
[+] [-] einarfd|8 years ago|reply
You really don't want to do this, who knows what they will take. It could be something that is important for running the company and this could wreak a lot of havoc.
[+] [-] Aissen|8 years ago|reply
They could start by adding a daily-fine for each day they don't pay the fine; then interest on top. Then, you can imagine all smartphones with a Qualcomm chipset suddenly being banned from a 510M+ people market. All companies in Europe being barred from doing any business with Qualcomm; all Qualcomm IP nullified in Europe. Imagine having any of your officials not being able to travel inside Europe and cross-extradition countries, forever. The list goes on.
[+] [-] matt4077|8 years ago|reply
In reality, the EU is world's largest economy, with about 20% of world GDP. It is also under the "rule of law", even more than the US by some measures.
In such a society with a long history of democracy and judicial independence, it is almost by definition impossible for a company to be ruined by government action unless it commits universally-recognised crimes (fraud, corruption etc.) or its business by nature entails equally recognized negative external effect (tobacco, environmental damage,...).
Because of the undertone possibly hinting at nationalistic motives (i. e. Europe harming a foreign competitor for its own business' benefit), I'll also point out that fines by the EU have historically tracked almost perfectly with the relative size of world regions' activity in the EU. In other words: European companies make up, say, 60% of the European market, and are also hit with 60% of the total fines.
The only divergence from this correlation has actually been a slightly lower number and amount of fines against US companies, and slightly higher enforcement actions against Asian companies. I believe this is most likely caused by the US' own national enforcement (and, as a result, corporate governance) being in better shape than Asia's.
[+] [-] toyg|8 years ago|reply
IANAL but I would expect EU antitrust law is a civil matter, not penal, so no, jail would be off the table. The EU has no police corps and no real "law" - it emanates resolutions that countries then turn into laws, and provides a location where treaties can be signed. Some of these laws and treaties define certain specific roles for certain EU authorities.
This is why the EU Commission will only ever emit "fines" and "sanction infractions", rather than prosecuting this or that person.
This said, the usual procedure is to perpetuate and escalate fines: they will fine you the first time, and if you keep misbehaving they will fine you pretty much every year, plus compounded interest of course. If you don't pay, they can ask specific countries to act and freeze or requisite your assets, or worse - depending on the laws of the specific country. Countries can (and occasionally do) choose to ignore these demands, but it would result in sanctions against the country, which are directly taken out of payments from the EU budget (for infrastructural work, education etc etc). This is, incidentally, why Ireland is forced to abide by the tax ruling on Apple: if they don't, EU funds will dry up until the whole sum is repaid.
In the worst-case scenario, the EU Commission could emit a directive banning all products from Qualcomm in the EU market, and let fines spiral into the trillions, but somehow I don't expect this will actually happen.
[+] [-] sgc|8 years ago|reply
[+] [-] raphaelj|8 years ago|reply
[+] [-] zuminator|8 years ago|reply
[+] [-] rasz|8 years ago|reply
[+] [-] danmaz74|8 years ago|reply
[+] [-] msh|8 years ago|reply
[+] [-] rhn_mk1|8 years ago|reply
Who fights by the sword, dies by the sword, I guess.
[+] [-] Jonnax|8 years ago|reply
I have a limited understanding of how these agreements, but isn't that just completely illegal?
How do you structure an agreement to be even a tiny bit plausible?
[+] [-] tooltalk|8 years ago|reply
According to Qualcomm's countersuit, Qualcomm did not demand that exclusivity first. It was Apple who proposed "discount" or "rebates" in exchange for the exclusivity and Qualcomm acquiesced to Apple's demand. Apple then turned around started telling regulators all around the world that Apple was FORCED to sign the exclusivity. Qualcomm was not allowed to directly counter Apple's claims, unlike US lawsuits, and Qualcomm's only recourse was to withhold the $1B rebate in breach of their business agreement -- their agreement forbids Apple from giving false testimony about their contract to regulators. I'm fairly sure that EU's findings are similar to those of China, Taiwan and Korea.
Qualcomm's anti-competitive baseband licensing was well known before and I think Qualcomm got dinged for the right reason. But Apple's claims are directly countered by Qualcomm and, given Apple's past problem with GTA and other suppliers and unless there are other victims of Qualcomm's "exclusivity" agreement -- I'm inclined to believe Qualcomm was tricked by Apple's clever lawyers.
[+] [-] Joe-Z|8 years ago|reply
They don't have to. They do whatever the hell they want and know they'll have to pay some tiny amount of their exorbitant profits to the EU for it. And even that they try to drag out as long as possible. (The article also mentioned Intel dragging out paying a fine for 9 years now)
I'm pretty sure these sorts of fines are already factored into their business plan.
[+] [-] sailingparrot|8 years ago|reply
Well they are being given a hefty fine for it... so yes.
[+] [-] lukejduncan|8 years ago|reply
[+] [-] mikevin|8 years ago|reply
But yes, it's difficult to define a hard line. I think the fact that this was a real deal and not just loyalty plays a part.
[+] [-] jcrei|8 years ago|reply
[+] [-] tooltalk|8 years ago|reply
[+] [-] dschuetz|8 years ago|reply
[+] [-] 0xFFC|8 years ago|reply
[+] [-] JustSomeNobody|8 years ago|reply
[+] [-] matt4077|8 years ago|reply
There's some debate in this thread about Apple actually coming up with the idea for exclusivity, but I'm not sure if that's actually relevant.
Analogy: The town's only supermarket is outrageously expensive. You tell the owner "give me $100 per month for the next 10 years, and I'll never go to another shop", because you can't get to another shop anyway and need to somehow lower food prices.
Then, 10 years later, a second store opens, you've started to grow your own potatoes, and you can actually risk ruining your relationship to the shop owner by telling the authorities that they have been gauging everyone.
[+] [-] getpost|8 years ago|reply
A year ago: Apple sues Qualcomm for roughly $1 billion over royalties https://www.cnbc.com/2017/01/20/apple-sues-qualcomm-for-1-bi...
[+] [-] rasz|8 years ago|reply
Not to mention Intel also hasnt yet paid AMD >$1B restitutions for directly bribing distributors and system integrators to drop its competitor from inventory.
[+] [-] lunchables|8 years ago|reply
My understanding is Qualcomm is kind of the undisputed leader with Intel trying to play catch up.
[+] [-] unknown|8 years ago|reply
[deleted]
[+] [-] goutham2688|8 years ago|reply
[+] [-] grigjd3|8 years ago|reply
[+] [-] simula67|8 years ago|reply
[+] [-] rowyourboat|8 years ago|reply
[+] [-] rbehrends|8 years ago|reply
No. See Article 102 TFEU [1]. Abuse of a dominant market position in order to distort or avoid competition can take many forms.
[1] https://en.wikipedia.org/wiki/Article_102_of_the_Treaty_on_t...
[+] [-] ams6110|8 years ago|reply
Probably not, because Windows Phones are in no way dominant so there's no abuse of a dominant market position there.
Though I don't know for sure how the EU would view it.
[+] [-] danmaz74|8 years ago|reply
[+] [-] abiox|8 years ago|reply
[+] [-] unknown|8 years ago|reply
[deleted]
[+] [-] agumonkey|8 years ago|reply
[+] [-] unknown|8 years ago|reply
[deleted]
[+] [-] unknown|8 years ago|reply
[deleted]