Chinese authorities said Tuesday that they have imposed a record fine of around 6 billion yuan (about $994 million U.S.) on mobile chip maker Qualcomm following an anti-monopoly investigation.
The National Development and Reform Commission (NDRC) said Qualcomm was found to have abused its market dominance by charging discriminatory fees in the Chinese market when licensing mobile chip technology.
“Qualcomm’s practices hampered innovation and technology development, harmed consumer’s rights and interests and violated China’s anti-monopoly rules,” the NDRC said in a statement.
The watchdog issued the fine, which amounts to about 8 percent of the Qualcomm’s revenue in the Chinese market for 2013. It is the largest anti-trust fine in China’s history and the largest of a recent wave of fines imposed on companies that China feels are unfairly dominating the market.
San Diego-based Qualcomm said in a statement that it would pay the fine and comply with China’s demand to modify its licensing practices.
“Qualcomm will not pursue further legal proceedings contesting the NDRC’s findings,” the company said.
The NDRC said it started the anti-trust probe in November 2013 and that the fine would stop the company’s monopolistic practices, safeguard fair market competition and protect consumer interests. It said Qualcomm improperly bundled unrelated licenses with ‘base band’ chip sales, forcing Chinese customers to pay for licenses they didn’t need.
The company cooperated with the probe and proposed a set of rectification plans.
The NDRC said it welcomed the company’s decision about investing in China and supported the company to charge a reasonable licensing fee for its technology, which is protected by patents.
“We are pleased that the investigation has concluded and believe that our licensing business is now well positioned to fully participate in China’s rapidly accelerating adoption of our 3G and 4G technology,” said Derek Aberle, President of Qualcomm.
While U.S.-based tech company Qualcomm remains one of the biggest makers of mobile phone chips, China is the largest mobile phone and wireless device maker in the world.
China has stepped up law enforcement against monopolies in recent years and a number of foreign and domestic companies have been fined for violating the country’s ‘anti-trust’ laws.
This report complied with information from Xinhua and AP
Alden Abbott of Heritage Foundation discusses China foreign investment
CCTV America spoke with Alden Abbott on this historic fine. Abbott is the Deputy Director of the Edwin Meese III Center for Legal and Judicial Studies and was formerly the Director of Patent and Antitrust Strategy for BlackBerry.