FILE PHOTO: A man walks past a Qualcomm advertising logo at the Mobile World Congress at Barcelona, February 27, 2013. Picture: REUTERS / ALBERT GEA
FILE PHOTO: A man walks past a Qualcomm advertising logo at the Mobile World Congress at Barcelona, February 27, 2013. Picture: REUTERS / ALBERT GEA

Washington — Chipmaker Qualcomm’s shares sank more than 12% in premarket trading on Wednesday after a US federal judge ruled that the company violated antitrust law.

US district judge Lucy Koh ordered Qualcomm to change its pricing and sales practices, after finding it “engaged in anticompetitive conduct” towards customers such as China’s Huawei, Samsung and Sony.

“Qualcomm’s licensing practices have strangled competition” in the chip market for years “and harmed rivals”, she added.

The southern California-based company’s shares had soared after reaching a settlement with Apple in April over royalty payments for chips used in smartphones, which was expected to generate a $4.5bn windfall.

But the 230-page ruling showed the company violated Federal Trade Commission laws by using “unfair methods of competition”.

The company said it will seek an expedited appeal of the ruling.

“We strongly disagree with the judge’s conclusions, her interpretation of the facts and her application of the law,” Qualcomm executive vice-president and general counsel Don Rosenberg said.

Koh cited statements from company executives that showed the “unlawful practices are ‘ongoing’ or likely to recur” since they are part of the firm’s strategy and it maintains a dominant position in the market.

Among the actions ordered, the judge said she will “prohibit Qualcomm from discriminating or retaliating in any way against any modem-chip customer or modem-chip supplier because of a dispute with Qualcomm over licence terms or because of a customer’s licence status”.

AFP