The FTC believes that Qualcomm’s licensing practices demonstrate anticompetitive behavior
In September 2020, the Federal Trade Commission (FTC) petitioned the U.S. Court of Appeals for the Ninth Circuit for a rehearing of the August 2020 decision of a panel of that court in siding with Qualcomm on the issue of whether the chip maker’s licensing practices are anticompetitive. Following the denial of that petition, the FTC has decided not to get the U.S. Supreme Court involved, and therefore, has unequivocally decided to throw in the towel.
The FTC, however, remains convinced that Qualcomm’s practices absolutely demonstrate anticompetitive behavior and that the court has made a bad call.
“Given the significant headwinds facing the Commission in this matter, the FTC will not petition the Supreme Court to review the decision of the Court of Appeals for the Ninth Circuit in FTC v. Qualcomm,” said Acting FTC Chairwoman Rebecca Kelly Slaughter in a statement. “The FTC’s staff did an exceptional job presenting the case, and I continue to believe that the district court’s conclusion that Qualcomm violated the antitrust laws was entirely correct and that the court of appeals erred in concluding otherwise.”
“Now more than ever, the FTC and other law enforcement agencies need to boldly enforce the antitrust laws to guard against abusive behavior by dominant firms, including in high-technology markets and those that involve intellectual property.”
What exactly Slaughter means by “headwinds” is not entirely clear but perhaps refer to the opposition its case has faced throughout the four-year battle from much of the legal community, including the U.S. Department of Justice, which not only vehemently opposed the case, but went as far as to testify against it at the appeals hearing. Legal scholars, Ninth Circuit judges, as well as previous FTC commissioners all have also expressed opposition to the FTC’s case.
The FTC’s original case against Qualcomm took aim at the company’s practice of charging a license fee for its IP in addition to charging for the physical modem chips. This same practice was also the subject of Apple’s unsuccessful case against Qualcomm, which was ultimately settled in 2019. Such behavior was considered by the FTC to violate both Section 1 and Section 2 of the Sherman Act, and therefore, are anticompetitive and restrict the business activities of Qualcomm’s competitors.
According to Prakash Sangam, founder and principal at Tantra Analyst, Qualcomm’s court victory “establishes a pretty significant precedence for licensing practices and applicability of antitrust laws” and “will have a long-lasting impact on not only the cellular but almost the entire technology industry and beyond.”
This is because when the U.S. Court of Appeals for the Ninth Circuit overturned the initial ruling, it sent the message that Qualcomm’s licensing policies are “completely valid and legal.”
“With 5G set to transform almost every industry on the planet,” added Sangam, “the repercussions of the case are impossible to overstate.”
