UK Consumer Watchdog Sues Qualcomm for Allegedly Breaching Competition Law

Around 29 million Britons who own an Apple or Samsung phone could be entitled to a collective £480m payout if a landmark legal claim against U.S. chipmaker Qualcomm is successful.

qualcomm iphone 7
Consumer watchdog Which? is suing the chipmaker for allegedly breaching U.K. competition law by taking advantage of its dominance in the patent licensing and chip markets.

As reported by the BBC, Which? alleges that Qualcomm charged Apple and Samsung inflated fees that were then passed on to consumers in the form of higher smartphone prices.

Which? is seeking up to £30 each in damages for about 29 million people in the U.K. who own Apple or Samsung smartphones that have been purchased since October 1, 2015. For Apple smartphone owners, that would include iPhone 6s and 6s Plus and newer devices. The watchdog has filed its legal claim with the Competition Appeal Tribunal, which will ultimately decide if it can go ahead.

"We believe Qualcomm's practices are anti-competitive and have so far taken around £480m from consumers' pockets," said Anabel Hoult, CEO of Which? "This needs to stop. We are sending a clear warning that if companies like Qualcomm indulge in manipulative practices which harm consumers, Which? is prepared to take action."

Responding to the case, Qualcomm said it had "no basis."

"As the plaintiffs are well aware, their claims were effectively put to rest last summer by a unanimous panel of judges at the Ninth Circuit Court of Appeals in the United States," a spokesman told the BBC.

This is by no means the first time that Qualcomm has been accused of anticompetitive behavior. In 2018, Qualcomm was hit with a 997 million euro ($1.2 billion) fine by EU antitrust regulators for paying Apple to use its LTE chips in iOS devices.

According to the European Commission's investigation, the payments to Apple occurred from 2011 to 2016, and were made with the sole aim of blocking Qualcomm's LTE chipset market rivals, such as Intel.

In 2019, an antitrust lawsuit, brought against Qualcomm by the Federal Trade Commission, concluded that Qualcomm's "no license, no chips" model that allowed it to refuse to provide chips to companies without a patent license, violated federal antitrust laws, and required Qualcomm to renegotiate all of its licensing terms with customers in good faith.

However, in August 2020, Qualcomm won an appeal that prevented the San Diego company from having to renegotiate its licensing agreements with smartphone makers.

Top Rated Comments

Quu Avatar
16 months ago
This is the same behaviour Intel engaged in during the early to late 2000's where they were paying Dell, HP and others to not use AMD processors in their computers. Qualcomm paid Apple rebates to not use Intel modems.

Intel lost that case, Qualcomm should similarly lose this one by using that earlier case as precedent.
Score: 6 Votes (Like | Disagree)
Radeon85 Avatar
16 months ago
So do we get multiple payouts if we bought devices every year since 2015?, bet we don't.
Score: 4 Votes (Like | Disagree)
techwhiz Avatar
16 months ago

Can’t blame apple (or any other company) for wanting to mitigate the fees based on selling price for the same chip.
Here is the fee schedule link: https://www.qualcomm.com/media/documents/files/qualcomm-5g-nr-royalty-terms-statement.pdf

* An effective running royalty rate of 2.275% of the selling price of branded single-mode 5G handsets; and
* An effective running royalty rate of 3.25% of the selling price of branded multi-mode (3G/4G/5G) handsets.

They charge different rates on the features and modes of the device.
It's not secret and you have a choice. The choice is don't use their technology.
They sell chips and the license is separate from the cost of the device.
So it's two parts; cost of chip and cost license (device).
Since I work in the chip industry it makes perfect sense to me. The cost of manufacturing the silicon is one cost.
The cost of the license is another.
People will say it's "double dipping".
Okay so they raise the cost of the device and everyone pays the higher price. (Apple and everyone pays one price).
They then charge a license of others just using the patents.
They make the same money, if not more, and the emerging country suffers because the cost of the low end handset just went up.
Score: 2 Votes (Like | Disagree)
ksec Avatar
16 months ago

This is the same behaviour Intel engaged in during the early to late 2000's where they were paying Dell, HP and others to not use AMD processors in their computers. Qualcomm paid Apple rebates to not use Intel modems.

Intel lost that case, Qualcomm should similarly lose this one by using that earlier case as precedent.
That is absolutely false. People will need to understand one thing.

Your Love of Apple, or any entity replacing Apple, does not automatically made that entity's rival or enemy evil. So please stop making these claims.

First, Intel *did* pay the major vendors not to use AMD. Or to be more precise Intel will stop the rebate to vendor if they were selling AMD. Either way this was ruled as anticompetitive and illegal.

Second Qualcomm did *not* force Apple to buy their chip. Qualcomm did however force Apple not sell a WiMAX iPhone. ( WiMax being very similar to TD-LTE that is currently deployed and used by Sprint in the US ). Again *force* may not be the correct term. Qualcomm will refuse to sell you a Modem if you sell a WiMax iPhone. This isn't strictly illegal, since you can still buy 3G/4G Modem from others.

It is not clear right now what the claims the consumer watchdog are suing Qualcomm in UK. But the idea of No License No Chips has stood the test of court. Again, no one force you to buy Qualcomm Modem, you can make one yourself which is what Samsung, Huawei are doing. As well as Mediatek selling SoC with Modem, all three combined representing 50%+ of Worldwide market and *increasing*. Should Apple make their own Modem, along with possibly BBK buying or licensing Modem IP from Huawei, You are looking at Qualcomm having less than 30% of the Modem / SoC Market to play with. Hardly a monopoly by anyone's or any court's definition.

One could argue whether Qualcomm's patent licensing fee are too expensive and not FRAND. That is up for debate, the Apple's PR speak of Qualcomm's patent fee charging more than Double of the next 6 companies combined have been shown in court as a spin ( I would even call it a lie ) rather than absolute truth. So should you decide to argue for that my suggestion is that one should be well versed in the situation or ask questions instead of jumping to conclusion. That is of course, unless you are an Apple apologist.
Score: 2 Votes (Like | Disagree)
techwhiz Avatar
16 months ago

Qualcomm should focus on making the best CPU's, then they wouldn't have to charge others for not using them. But, it was strange that Qualcomm can charge phone makers for patents, when the phone maker is not using any Qualcomm chips, like they did with Apple.
When Intel made modems Apple paid the licensing fee that is required when the technology is put into a phone.
Intel used patents from Qualcomm to develop the modem.
The licensing fees are based on handset price.
The handset price and features are used as the basis for the license so expensive phones (Samsung, Apple, etc.) subsidize technology for emerging markets.
Score: 2 Votes (Like | Disagree)
Nuno Lopes Avatar
16 months ago
This is similar to what Apple does in the App Store while not collecting 30% of the sale but much much less. Heck Apple accepted the payments. I wonder why Qualcomm had to pay to secure Apple has a client in the first place ... right I remember Apple suing Qualcomm before ... ehehehehe. I wonder if Google is next, by paying Apple billions to be the default search engine ... hence keeping competition out.
Score: 2 Votes (Like | Disagree)

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