APAA e-Newsletter (Issue No. 35, June 2023)

Korean Supreme Court Upholds Fine Against Qualcomm for Violating Antitrust Law

John W. Chung, Y.P.Lee, Mock & Partners (Korea)

South Korea’s Supreme Court has upheld a $760 million fine imposed on Qualcomm by the Korea Fair Trade Commission (KFTC) in 2016 for antitrust violations.

The KFTC accused Qualcomm of violating antitrust laws in the mobile phone chip market by pressuring customers to sign unfair licensing agreements and charging excessive royalties for its patents. Specifically, the KFTC alleged that Qualcomm required its customers to license its patents on a “no license, no chips” basis. This means that Qualcomm would only sell its chips to customers who agreed to its licensing terms, which the KFTC considered to be unfair.

In December 2016, the KFTC fined Qualcomm $760 million for these antitrust violations. Qualcomm appealed the decision to the Seoul High Court. Qualcomm argued that its licensing terms were fair and reasonable, and that it had not violated FRAND principles. In February 2020, however, the Seoul High Court maintained the fine to $760 million.

This decision was further appealed to the Supreme Court of South Korea. Qualcomm argued again that the KFTC’s decision was based on flawed analysis and that Qualcomm had not violated antitrust laws. The KFTC, on the other hand, sought to have the original fine reinstated.

In April 2023, the Supreme Court upheld the KFTC’s decision, confirming the fine of $760 million against Qualcomm. The court found that Qualcomm’s licensing practices had caused harm to both consumers and competitors in the market and that the KFTC’s decision was based on valid legal analysis.

The ruling sets an important precedent for antitrust enforcement in South Korea.  In addition, the ruling may impact Qualcomm’s business practices not only in South Korea but also in other countries. The ruling also implies that other technology companies may have to pay a fine by South Korea’s antitrust regulator if they do not comply with FRAND principles.