The Qualcomm antitrust case, which lasted more than a year, finally settled.

Absrtact: The high-pass antitrust case, which has lasted more than a year, has finally settled. The 6.088 billion-dollar fine, for international chip giants Qualcomm, accounts for only 8% of its 2013 sales in China. Qualcomm simply accept the fine, more proof that it is completely not worried about this place

Note

The Qualcomm antitrust case, which lasted more than a year, finally settled.

The 6.088 billion-dollar fine, for international chip giants Qualcomm, accounts for only 8% of its 2013 sales in China. Qualcomm simply accept the fine, but also prove that it is not worried about the punishment will affect its monopoly status, because in this battlefield, there is no rise of a rival market body.

However, we cannot underestimate the significance of the NDRC's antitrust penalties for Qualcomm, which ended the patent model for Qualcomm's "free Reverse authorization", which relies on its market dominance and is strongly promoted in the industry. This has a far-reaching impact on improving the competitive environment in the domestic market.

"Free Reverse authorization" mode, for the domestic patent reserves of manufacturers are obliged to eat the "overlord meal" for those who lack of patent reserves are "umbrella". Now, "Overlord Meal" and "umbrella" is gone, patent competition battlefield will really start. (Zhengsheng)

Core Summary

Wang Junlin, director of the antitrust and anti-unfair Competition Professional Committee of the law firm, said in an analysis of the 21st century Economic report that the punishment, while highlighting the determination of the NDRC to enforce the anti-monopoly law, did not change the profitability model of Qualcomm. "Is it reasonable to use the whole machine as the basis for calculating royalties?" Is there any price discrimination in China and other countries for its specific charges? These issues need to be further studied. If there is sufficient evidence that this practice is suspected of abusing market dominance, stakeholders can continue to report or initiate proceedings. ”

This reporter Oscar Wilde Beijing report

February 10, 2015, the National Development and Reform Commission announced the world's largest handset chip manufacturers of the United States Qualcomm's antitrust investigation and punishment results, ordered Qualcomm to stop the relevant violations, the 2013 China's market sales of 8% of the fine, accounting for 6.088 billion yuan.

For the above results, Qualcomm expressed acceptance, neither apply for administrative reconsideration, nor bring administrative proceedings.

That would set the highest level of fines for China's antitrust investigations. February 9, the NDRC price supervision and inspection and antitrust director Hucunlin Public said that the 2014 National Development and Reform Commission and provincial price authorities to investigate and punish price monopoly cases imposed economic sanctions 1.8 billion yuan, an increase of 50.7% than 2013. This means that the fine in the Qualcomm case will be three times times more than the price of the antitrust penalty last year.

"The case from the launch of the investigation to the results of the official announcement lasted more than a year, is currently the highest amount of punishment, the number of positive confrontation, investigation difficult, far-reaching impact of the first case of China's anti-monopoly investigation." "The 21st Century Economic report was analyzed by Huang, a partner of Beijing Tianyuan law firm, and Secretary general of the China National Bar Association's Antimonopoly Professional committee, who began to take part in the case more than a year ago."

Wang Junlin, director of the antitrust and anti-unfair Competition Professional Committee of the law firm, said in an analysis of the 21st century Economic report that the punishment, while highlighting the determination of the NDRC to enforce the anti-monopoly law, did not change the profitability model of Qualcomm. "Is it reasonable to use the whole machine as the basis for calculating royalties?" Is there any price discrimination in China and other countries for its specific charges? These issues need to be further studied. If there is sufficient evidence that this practice is suspected of abusing market dominance, stakeholders can continue to report or initiate proceedings. ”

According to the Administrative Punishment law, the Administrative Punishment decision book should be open to the society, but as of press, the decision of the high-pass administrative penalty has not been made public.

Development and Reform Commission disclosure investigation process

On February 10, the Development and Reform Commission on the case held in the ventilation meeting, Hucunlin introduced the development and Reform Commission to investigate the process of Qualcomm.

In 2009, two US companies reported to the NDRC on a monopoly of Qualcomm, and in August 2014, a US company reported Qualcomm, and other Asian companies reported to the NDRC. Over the course of the investigation, the NDRC and Qualcomm conducted 28 communication sessions, with Hucunlin and Qualcomm managing director in succession to 8 meetings.

In the meantime, China Communications Industry Association to report Qualcomm company to NDRC, and listed Qualcomm in China's "Seven cases": the whole machine as the basis for calculating the license fee, the standard necessary patent and non-standard necessary patent bundle license, require licensee to carry out free of charge, the continuation of the charges for expired patents, the patent license and sales of chips to bundle, Refusing to grant patent license to chip manufacturers and attaching unreasonable trading conditions to patent license and chip sales.

The NDRC has the market dominance in the CDMA, WCDMA and LTE wireless communication standards necessary patent licensing market and baseband chip market, and has implemented abuse of market dominance, mainly in three aspects.

The first is the charging of unfair high royalties. Qualcomm has refused to provide a patent list for the patent license of Chinese enterprises, and the expired patent has been included in the patent portfolio and a license fee has been collected. At the same time, Qualcomm requires our licensee to be held by the relevant patent to the free reverse license, refused to deduct the license fee in the reverse license of the patent value or to provide other price. In addition, in the case of a licensee who has been forced to accept a package of non-standard patent packages, Qualcomm, while insisting on higher licensing rates, collects royalties at the wholesale net price of the whole machine. The combination of these factors leads to excessive licensing fees.

Second, there is no justification for tying up non-wireless communication standards with the necessary patent license. In the patent license, Qualcomm does not distinguish between the nature of the wireless communication standards necessary patents and non-wireless communication standards for the necessary patents and separate licensing, but the use of wireless communication standards in the necessary patent licensing market dominance, there is no justification for the non-wireless communication standards necessary patent licensing for tying, Some of our licensees have been forced to obtain non-wireless communication standards necessary patent licenses from Qualcomm.

Third, in the baseband chip sales to attach unreasonable conditions. Qualcomm will sign and not challenge the patent license Agreement as a condition for our licensee to obtain its baseband chip supply. Qualcomm refuses to supply baseband chips if the potential licensee has not signed a patent license agreement containing the above unreasonable terms, or if the licensee has contested and sued the patent license agreement. Since Qualcomm has a dominant market position in the baseband chip market, our licensee is highly dependent on its baseband chip, and the Qualcomm company attaches unreasonable conditions to the base-band chip sale, which makes our licensee accept unfair and unreasonable patent license conditions.

Therefore, the NDRC has proposed that Qualcomm's behavior precludes and restricts market competition, hinders and inhibits technological innovation and development, undermines the interests of consumers, and violates China's anti-monopoly law on prohibiting operators with market dominance from selling goods at unfairly high prices, There is no justification for tying goods and imposing unreasonable trading conditions on transactions.

Qualcomm proposes five corrective actions

The NDRC's announcement shows that Qualcomm has offered five measures in a package of corrective actions.

These corrective actions are aimed at Qualcomm's licensing of certain wireless standard-necessary patents, including: (1) for the use of the domestic mobile phones, in accordance with the wholesale net sale price of the whole machine to receive a patent license fee, (2) to the licensee of China to carry out patent licensing, will provide a list of patents, not to the expired Patent charge license fee (3) Do not require the licensee of our country to make the patent for free reverse license; (4) when carrying out the necessary patent license for the wireless standard, there shall be no justifiable reasons for tying the necessary patent license for the non-wireless communication standard; (5) The sale of baseband chips does not require our licensee to sign a license agreement containing unreasonable conditions, The patent license agreement is not to be challenged as a condition for the supply of baseband chips to our licensees.

"These corrective measures have broken the high Qualcomm's attempt to use the chip market, the standard necessary patent market to carry out the conduct of a carefully constructed trading model." "Huang points out," mobile phone terminal enterprises can no longer because of the fear Qualcomm refused to provide chips and accept unreasonable licensing conditions, in the negotiations with Qualcomm have a certain initiative. For the 3G, 4G areas have accumulated a large number of invention patents and standards of the necessary patented technology for the Chinese enterprises can therefore be fair participation in international competition opportunities, the realization of its intellectual property value. ”

Wang Junlin pointed out that, "in response to Qualcomm's five rectification measures proposed by the NDRC to further clarify the specific period of rectification, and Qualcomm if not to rectify the reform and Development Commission will take what measures." It is hoped that the current decision on punishment, which has not yet been made public, can cover these elements. ”

According to the NDRC's announcement, because of the nature, depth and duration of the monopolistic practices of Qualcomm's abuse of market dominance, the NDRC imposed a fine of 8% on China's market sales in 2013, while ordering Qualcomm to stop its illegal activities.

According to Qualcomm's 2013 earnings, Qualcomm's 2013 fiscal year revenue of 24.87 billion U.S. dollars, including patent costs income of 7.88 billion U.S. dollars, China's market revenue of 12.3 billion U.S. dollars, accounting for 49%.

According to the provisions of regulation 47th of the Antimonopoly Act, the Antimonopoly Law enforcement agencies may be liable for a fine of more than 1% 10% of the sales in the previous year, Hucunlin. "We are not punished according to the highest standard of 10%, but in accordance with the 8% standard." "Qualcomm initially thought the fine was a bit heavy, but we thought it was reasonable and eventually Qualcomm accepted it." Hucunlin said the fines were calculated on the basis of the National foreign exchange administration's average exchange rate.

Two more regrets.

Despite a record number of fines, experts interviewed by the 21st century Economic reporter also pointed to some of the regrets about the result of the punishment.

An expert on antitrust law, who declined to be named, stressed the 21st century Economic report the first crime of Qualcomm's "Seven Sins" listed by China Communication Industry Association is to use the whole machine as the basis of calculating patent license fee, which is only partially solved in the result of this punishment, and is limited in "The mobile phone sold for use in our country, can be in accordance with the wholesale net sale price of 65% to receive a patent license fee ", the implication is that" for the use of our country outside the sale of mobile phones still need to wholesale net price of the whole machine to receive a patent license fee of 100%. "

What is more crucial, the experts stressed, is that the industry's expected change in Qualcomm's profit-making model-changing the benchmark for patent licensing fees from the entire device to some parts of the phone-has not been achieved.

Earlier, the Chinese Academy of Social Sciences researcher Wang Xiaoye once told the media publicly that Qualcomm is not according to the price of a single chip, but in accordance with the final product prices to collect royalties, this calculation is unfair and unreasonable, expanding the calculation of patent license fee base, The part of the machine product that does not involve its patent also collects the expense.

"Qualcomm's cellular communications standards, the necessary patented technology only through baseband chip to achieve communication functions, and baseband chip is only a part of the mobile phone, with the development of smartphones, the value of communication function is increasingly low, according to the final sales price of the whole machine as the pricing basis for licensing fees can not reflect the value of patented technology, But it will make consumers suffer unreasonable high cost. "Huang points out.

Huang Analysis, judging from the judgments of similar cases in other national courts, the court is increasingly inclined to consider the ratio of the requisite technology of licensor standards to the "minimum selling equipment" as the basis for pricing.

At the same time, the NDRC's punishment did not involve the confiscation of Qualcomm's illegal income. In accordance with the provisions of article 47th of the Antimonopoly Act, if the operator violates the provisions of this law and abuses the dominant position of the market, the Antimonopoly Law enforcement agency shall confiscate the illegal income.

"In fact, since the implementation of the Anti-Monopoly law, there have been few cases in which confiscation of the illegal measures has been taken." Jiemin, director of the Institute of Economic Law at Peking University Law School, said that the determination of illegal income would be very complicated and would face a series of technical problems, such as when the illegal income began to be counted. What are the illegal gains in the overall revenue and profit? is the cost deducted from the illegal income?

Qualcomm frequently encounters antitrust

Outside China, other countries and regions have also launched antitrust investigations or lawsuits against Qualcomm.

In the United States, the Company (hereinafter referred to as "Bo Tong") in 2005 for discriminatory pricing and "loyalty discount" and other monopolistic actions to prosecute Qualcomm, in 2009, the two sides reached a settlement, high to Bo to pay 891 million U.S. dollars compensation.

In the EU, in 2005, Nokia, Ericsson, Bo Tong, Texas Instruments, Panasonic, NEC6 companies to the European Commission to sue Qualcomm violated the EU competition law, 2009 Qualcomm and the complainant reached a settlement to withdraw the complaint, the EU stopped investigating.

2009, South Korea's Fair Trade committee, according to South Korea's "Fair Trading law" to identify Qualcomm "loyalty discount" constitutes a monopoly, issued a 208 million-dollar ticket to Qualcomm, although Qualcomm has paid a fine in 2010 years, but has been trying to appeal, the first appeal to the South Korean Seoul High Court, and now appealed to the

Japan also found in 2009 that Qualcomm required licensees to issue licenses free of charge, not to appeal to the provisions of the arrangements to constitute a monopoly, to the Qualcomm issued a stop and restraining order, the case in Japan is in the administrative hearing procedure, the ban is suspended.

At the end of 2014, the European Union restarted an antitrust investigation into the Gotongki chipset business, and the Federal Trade Commission (FTC) launched an investigation into the Qualcomm patent licensing business, but according to Qualcomm, the survey was "very preliminary" and "at the information gathering stage".