The United States Federal Trade Commission has filed a legal case against Qualcomm, a supplier of modems. The lawsuit stems from allegations that the company is engaging in anti-competitive practices with regard to selling its modems to smartphone manufacturers.
The FTC said that using its "no license, no chips" policy, Qualcomm would not sell its modems to producers who do not agree with its licensing terms. But given that the company is one of the only companies that can provide a large supply of modems of high-end quality, manufacturers have no choice but to agree with the terms. Otherwise, they would have to pay extra just to use Qualcomm's patents or they cannot make smartphones on a large scale, as reported by The Verge.
In addition, Qualcomm essentially makes competitors' modems more expensive when it charges companies an extra fee for phones built with a modem from a competitor. The FTC said that this practice "excludes these competitors and harms competition."
"By excluding competitors, Qualcomm impedes innovation that would offer significant consumer benefits, including those that foster the increased interconnectivity of consumer products, vehicles, buildings, and other items commonly referred to as the Internet of Things," the FTC said in a statement.
In a separate report, The Verge said that Qualcomm also bribed Apple into making a WiMax iPhone back in 2007. In return, Qualcomm allegedly paid Apple some of its patent royalties.
Qualcomm has denied the anti-trust accusations and insisted that they are "based on a flawed legal theory, a lack of economic support and significant misconceptions about the mobile technology industry," according to the publication. The company also denied withholding chip supply just to make partners agree to unfair or unreasonable licensing terms.
Qualcomm's shares fell 4 percent on Tuesday following the news of the antitrust case filed by the regulator, CNBC reported.
