U.S.-based chip maker Qualcomm, Inc. (NASDAQ:QCOM) is under investigation by the European Union’s top anti-trust authority, the European Commission (EC), on charges the company abused its market power breaking EU law.
“We are launching these investigations because we want to be sure that high-tech suppliers can compete on the merits of their products,” European Competition Commissioner Margrethe Vestager said in a statement.
The EC has launched two separate investigations into Qualcomm’s activity. The first inquiry focuses on whether the company manipulated the market by offering financial incentives to customers on condition they bought exclusively or almost exclusively from Qualcomm. The second inquiry focuses on whether Qualcomm engaged in “predatory pricing” by charging below the actual cost to force competitors out of the market.
If proven true, either of these charges could result in Qualcomm being fined more than $2.5 billion or up to 10% of their global earnings and forced to change their business activities.
Qualcomm has already been fined $975 million in a separate investigation by the Chinese government. The investigation, which lasted for 14-months, found Qualcomm responsible for participating in illegal anti-competitive practices. The company was also investigated by the U.S. Federal Trade Commission on similar accusations.
However, Qualcomm has vehemently denied the charges from the EC pertaining to its activities in the EU market. In an emailed statement the company stated, “We continue to believe that any concerns are without merit.”
Nevertheless, the company pledged to cooperate with EC investigators over the coming months.
Several other companies including Google, the ebook business of Amazon, and the tax affairs of Amazon, Apple, and Starbucks are also being investigated by the EC for marketplace violations potentially revealing larger market manipulation problems.
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