South Korean regulator fines Qualcomm record $208M

SEOUL, South Korea - South Korea's fair trade regulator said Thursday it was slapping U.S. chip maker Qualcomm Inc. with a record fine over what it said was abuse of market dominance. The company vowed to fight the decision.

The Korea Fair Trade Commission said in a statement that it was fining the San Diego, California-based company 260 billion won ($208 million), the largest such levy ever in South Korea.

The commission, which had been investigating Qualcomm since 2006, said the company abused its dominant position in CDMA mobile phone chips by charging higher royalties for companies that used rival chipsets. It also said that Qualcomm favored customers who used its products by offering rebates.

The commission also ordered Qualcomm to correct the practices.

Donald Rosenberg, Qualcomm executive vice president and general counsel, said the company "strenuously" disagreed with the decision and called the fine "overly excessive and unwarranted."

After receiving a formal written decision, which could take several months, Rosenberg said the company's options included fighting the ruling in South Korean courts.

Qualcomm developed CDMA, or code division multiple access, a rival standard to the dominant cellular standard GSM, or global system for mobile. The company controls most of the key patents.

CDMA is used in the United States and South Korea. Every handset in South Korea has a CDMA chip and manufacturers of handsets have to pay royalty fees to Qualcomm.

Qualcomm, which licenses technology for mobile phones and manufactures semiconductor chips that run them, earns money by licensing the CDMA technology to other chip makers, handset manufacturers and wireless technology companies.

The previous highest fine was one of 113 billion won slapped on a South Korean telephone operator in 2005, the commission said.

Microsoft Corp. was fined 32.5 billion won in 2006 for what the commission ruled was the company's abuse of its dominant market position by tying certain software to its Windows operating system. Microsoft initially fought the decision, but eventually withdrew its appeal.

Last year semiconductor giant Intel Corp. was fined 26.6 billion won over rebates to South Korean computer companies. Intel said it would fight the decision in court.

__

Associated Press Writer Jae-soon Chang contributed to this report.

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.