Published: October 11, 2017

On October 11, 2017, the Taiwanese Fair Trade Commission (TFTC) announced an enforcement action against Qualcomm, Inc. for competition law violations regarding Qualcomm’s behavior in the context of licensing for standards-essential patents. The TFTC’s enforcement action also levied a fine of T$23.4 billion (US$774.14 million) against Qualcomm.

The TFTC issued the following decision:

  • Qualcomm holds a monopoly position in the market for code-division multiple access (CDMA), Wideband CDMA (WCDMA) and LTE mobile communications baseband products, and has (1) refused to license chips to competitors, and (2) required competitors to adhere to overly-restrictive contractual clauses by refusing to supply chips without licensing agreements and/or exclusive rebate clauses. Qualcomm’s behavior unduly restricted competition in the baseband chip market in violation of Article 9, Paragraph 1 of the Fair Trade Act.

 

  • Qualcomm shall, within 60 days of the day after it receives the TFTC’s decision, cease the unlawful activities stated in this case, including the application of contractual provisions: (i) requiring competing chip manufacturers that have entered into such agreements to disclose sensitive sales information such as chip prices, transaction partners, sales quantities, and product model numbers; (ii) in relation to the refusal to supply chips if no license was granted on handset manufacturers that have entered into component supply agreements, and (iii) regarding exclusive transaction rebates which have an exclusionary effect on the companies that have entered into such agreements.

 

  • Qualcomm shall, within 30 days of the day after it has received the decision, notify chip competitors and handset manufacturers in writing that they may, within 60 days of receiving such written notice, make an offer to Qualcomm to amend existing patent licensing-related agreements or enter into new agreements. After receiving such an offer, Qualcomm shall negotiate in good faith; the scope of the negotiations shall cover but are not limited to any contractual provisions that the other party believes to be unfair pursuant to this decision. Further, the negotiation shall not restrict the other party from resolving disputes through a court or independent third-party arbitration.

 

  • Qualcomm shall, for every six months of the day after it receives the decision, report to the TFTC regarding the status of the aforementioned negotiations with the other parties and report to the TFTC within 30 days of any completed amendments or new agreements reached.

 

  • Qualcomm shall pay a fine of T$23.4 billion (US$ 774.14 million).

 

To read a complete, unofficial translation of the TFTC’s decision, please click here.