China’s antitrust regulator has fined Qualcomm Inc, the world’s largest chipmaker, 6.08 billion yuan ($975million), the highest penalty since China’s antitrust law took effect in 2008.
The fine amounts to 8 percent of Qualcomm’s 2013 revenue in China.
The company’s shares rose by 1.2 percent to close at $67.11 in New York on Feb 9 following the announcement, as investor concerns were dispelled.
The National Development and Reform Commission said in a statement on Feb 10 the key factors that led to the record fine include unfair and excessively high royalty payments Qualcomm collected from Chinese smartphone makers, product bundling and adding unreasonable conditions to the sale of base band chips.
A baseband processor is a chip in wireless transmission devices such as mobile phones that performs signal processing and implements the device’s real-time radio transmission operations.
Xu Kunlin, head of the antimonopoly bureau at the commission, told reporters on Feb 10: “Our purpose is to maintain fair competition in the industry. Some practices have hindered the innovation capability of other companies. This is not beneficial for the whole industry or customers.
“China’s restructuring needs technical innovation, but innovation is not relying on policies or financial allocation,” Xus aid.
“Fundamentally, it needs an environment of fair competition, so enforcement of the antitrust law is very important for China, and it will definitely be strengthened in the future.”
Xu said Qualcomm has strong technical capabilities, adding, “The Chinese market will be more open and we welcome more foreign companies from all over the world investing in China.”
Qualcomm said it will not pursue legal proceedings to contest the regulator’s findings.
China’s Anti-Monopoly Law allows the government to fine companies up to 10 percent of their annual revenue.
The country recently accounted for about half of Qualcomm’s revenue, which totaled $26.5 billion in the financial year that ended in September.
Officials from the commission said it had been investigating Qualcomm since November 2013 after two US companies told the regulator that the chipmaker had violated antitrust practices.