The European Commission’s competition watchdog has suffered another defeat as the EU’s General Court annulled a $1.04 billion (€997 million) antitrust fine against Qualcomm.
The decision to overturn the fine is aimed at the panel’s competition team, led by Danish politician Margrethe Vestager, who, according to the court, “committed a number of procedural errors [which] undermine Qualcomm’s rights of defense and invalidate the Commission’s analysis of Qualcomm’s conduct.
The original case involved a series of payments Qualcomm made to Apple between 2011 and 2016, which the competition authority said were made to guarantee the iPhone maker that it would only use Qualcomm chips.
Internal documents released at the time showed that Qualcomm believed the exclusivity payments had deterred Apple from switching to Intel. In 2018, the commission imposed its fine, which Qualcomm immediately appealed.
Qualcomm was also fined €242 million ($252 million) in another decision that found it engaged in anti-competitive behavior when it undercut prices to harm competitors.
Today’s judgment by the General Court overturns the Commission’s decision in its entirety, citing its own analysis of the anti-competitive effects of the payments alongside procedural issues as decisive factors.
Procedurally, the court objected that the scope of the decision was narrower than the statement of objections because the change was made without giving Qualcomm “an opportunity to be heard and adjust its analysis if necessary,” the decision says. This violated Qualcomm’s rights of defense.
Regarding the anti-competitive effects of the payments, the court found that payments for Qualcomm chips to remain in iPhones and iPads “are not sufficient to establish that they were anti-competitive for all of Apple’s requirements… the Commission has not provided an analysis enabling it to support the findings that the payments in question had in fact reduced Apple’s incentives to switch to Qualcomm’s competitors.
The decision is not surprising given the court’s decision to overturn a $1.2 billion fine against Intel for similar conduct, alleging that it offered hardware partners discounts for using its x86 chips over AMD’s have. The decision to vacate the fine in this case was based on similar grounds, with the ruling in this case saying that Intel was right in accusing the Commission of errors that ultimately led to the fine.
This second defeat makes 2022 an even worse year for Vestager and her staff at the Commission. Before Intel’s fine was lifted in January, the EC had not lost a major antitrust case in 20 years. Vestager took office in 2014.
The court is the EU’s second-highest legislative body, so Vestager has the opportunity to appeal, although the process can take years – Intel’s nullification of the fine took 12 years, while Qualcomm took five. A representative of the European Commission said The registry that it “tak[en] Note of today’s verdict.” The EC had no details to share, saying only that it would “carefully review the verdict and its implications and consider possible next steps.” ®