Qualcomm's Fine From KFTC: The Key Components You Need To Know

The Korea Fair Trade Commission, South Korea’s antitrust regulator, has fined QUALCOMM, Inc. (NASDAQ: QCOM) a record 1.03 trillion won (USD$853 million) for violating antitrust laws related to its licensing business. The company has recently been under scrutiny related to this high-margin business, Credit Suisse’s Kulbinder Garcha said in a report.

The investment recommendation for Qualcomm has been removed after the company agreed to acquire NXP Semiconductors NV (NASDAQ: NXPI), Garcha noted.

Ongoing Investigations

Qualcomm is currently facing investigations in Europe and the United States, and it has already been fined in China. Most recently, the KFTC indicated that the company had licensed its key patents only to mobile-phone makers and had not properly negotiated the terms of its licenses.

South Korea’s antitrust regulator had separately fined the company $208 million in 2009 for abusing its leading position in selling chips to cellphone manufacturers, Garcha mentioned. This is still under appeal at the South Korea Supreme Court.

Qualcomm intends to challenge the finds of the commission, saying it “reflects a flawed process and represents a violation of due process rights owed American companies under the Korea-U.S. Free Trade Agreement (KORUS),” Garcha wrote. The company has indicated that it would appeal the decision to the Seoul High Court.

Image Credit: "Korea Fair Trade Commission" By Minseong Kim (Own work) [CC BY-SA 4.0], via Wikimedia Commons