FTC files anti-competitive practices suit against Qualcomm

The Federal Trade Commission (FTC) sued Qualcomm on Tuesday, alleging that the processing chip maker used anti-competitive practices, particularly to get an exclusive deal with Apple.

The complaint, filed in federal district court in California, accuses Qualcomm of forcing cellphone manufacturers to pay increased rates for using certain processors from competitors, what the FTC refers to as an “anticompetitive tax.”

Federal officials also singled out Qualcomm’s deal with Apple to supply cell phone parts as particularly anticompetitive.

{mosads}“Qualcomm precluded Apple from sourcing baseband processors from Qualcomm’s competitors from 2011 to 2016,” reads the FTC announcement. “Qualcomm recognized that any competitor that won Apple’s business would become stronger, and used exclusivity to prevent Apple from working with and improving the effectiveness of Qualcomm’s competitors.”

The company lashed out at the FTC on Tuesday afternoon, accusing it of rushing out a lawsuit ahead of the transition between the two administrations.

“This is an extremely disappointing decision to rush to file a complaint on the eve of Chairwoman Ramirez’s departure and the transition to a new Administration, which reflects a sharp break from FTC practice,” Don Rosenberg, executive vice president and general counsel at Qualcomm, said in a statement.

Rosenberg added that Qualcomm was still receiving requests for information from the FTC when the lawsuit was filed.

“We have grave concerns about the two Commissioners’ decision to bring this case despite a lack of evidence supporting the allegations and theories in the complaint,” he said. “We look forward to defending our business in federal court, where we are confident we will prevail on the merits.”

On Friday, FTC Chairwoman Edith Ramirez, a Democrat, announced her resignation effective in February. The commission is currently comprised of two Democrats and one Republican, Maureen Ohlhausen, who was the sole vote against filing the lawsuit.

“I have been presented with no robust economic evidence of exclusion and anticompetitive effects, either as to the complaint’s core “taxation” theory or to associated allegations like exclusive dealing,” Ohlhausen said in a rare dissenting statement. “What I have been presented with is simply a possibility theorem.”