Qualcomm Violated Antitrust Laws, U.S. Judge Rules

“We strongly disagree with the judge’s conclusions, her interpretation of the facts and her application of the law,” Don Rosenberg, the company’s executive vice president and general counsel, said in a statement on Wednesday.

Qualcomm’s stock fell 11 percent in trading on Wednesday.

Judge Koh’s 233-page decision, which followed a 10-day trial in January, did not carry any immediate financial penalty. But it underscored the stiff legal headwinds that Qualcomm continues to face, despite the settlement with Apple. Antitrust lawyers said it was unclear whether the decision would affect the agreements struck by the companies, which were considered a major victory for Qualcomm.

In the April 16 settlement, reached shortly after the start of a trial in a separate case initiated by Apple, the iPhone maker agreed to pay Qualcomm back royalties. Qualcomm has estimated that as a result of the settlement, it would receive at least $4.5 billion in one-time revenue in the quarter ending in June. Apple also agreed to make future royalty payments and to resume buying chips from Qualcomm for future high-end phones.

Several hours after the settlement was disclosed, Intel, which replaced Qualcomm as the supplier of chips for the latest Apple iPhones, announced that it would stop developing chips for the next generation of wireless technology, known as 5G. Intel subsequently acknowledged that it was trying to sell its smartphone modem-chip business.

Judge Koh’s decision could aid lawyers in a lawsuit that seeks up to $5 billion in damages from Qualcomm on behalf of smartphone buyers who say the company royalty rates inflated prices for the devices. Judge Koh certified the case as a class action in September. Qualcomm is appealing the ruling.

In addition to disputing the trade commission’s antitrust allegations, Qualcomm has argued that its business model enables it to make investments in wireless technology that are vital to national security. Last year, President Trump blocked a potential hostile takeover of the company by Broadcom, which recently moved its headquarters from Singapore to California, on that grounds that a deal could weaken America’s leadership in technologies like the new 5G cellular networks.

The Justice Department, in an unusual move, recently urged Judge Koh to hold evidentiary hearings about potential remedies if she ruled against Qualcomm in the trade commission case. The commission, in a five-sentence rebuttal, called the Justice Department filing “untimely” and said it disagreed with a number of its contentions. Both agencies enforce antitrust actions; the trade commission has taken the lead on some high-profile cases targeting individual chip companies.


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