EU Opens Formal Proceedings Against Qualcomm

The European Commission launched formal antitrust proceedings against U.S. chip maker Qualcomm after complaints that its patent licensing for third-generation mobile telephones broke competition rules.

Matsushita Electric Industrial, Nokia, Broadcom , NEC, Texas Instruments and Ericsson have said Qualcomm's fees were far higher than the agreed-upon standard of "fair, reasonable and non-discriminatory."

The Commission said in a statement it will conduct an in-depth investigation as a matter of priority, a process which can take months or even years.

The move had long been expected and comes nearly two years after the complaints were lodged with Brussels.

It comes two weeks after the Commission won a major victory against U.S. technology giant, Microsoft, when the EU's top court threw out the software maker's appeal against a landmark antitrust ruling by Brussels dating back to 2004.

Swift Resolution

Qualcomm stressed the Commission's decision on Monday did not imply it has conclusive proof of any infringement.

"We are pleased that the Commission has decided to give the case priority status to move it forward swiftly to resolution," Steve Altman, president of Qualcomm, said in a statement.

"We welcome the continuation of our dialogue with the Commission in order to demonstrate that the complaints are without merit and are motivated by commercial considerations of the entrenched complainants who are trying to stifle the competition that Qualcomm brings to the market."

The probe could lead to the Commission scrapping the investigation, seeking a settlement with Qualcomm or issuing a statement of objections if it sees legal violations.

The companies which complained about Qualcomm said at the time it charged the same for using its patents for new technology as it did for an older system, even though its patents account for a far smaller percentage of the new system.

The complainants also allege that overly high royalties could push up handset prices for consumers, hamper development of the 3G standard and lead to future problems with fourth-generation mobile phone technology, the Commission said.

Qualcomm's Altman said the company would show it had abided by its obligations and that its licenses had opened up 3G technology to new players, fostering competition and growth.