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Firms File Qualcomm Complaints in S. Korea

Texas Instruments and Broadcom say wireless tech firm used its royalty policy to manipulate the market. Domestic firms had already objected.

July 03, 2006|From Reuters

SEOUL — Texas Instruments Inc. and Broadcom Corp. have filed complaints that Qualcomm Inc. stifled competition in the South Korean modem chip market, an official with the country's Fair Trade Commission said Monday.

The agency had already been investigating Qualcomm after similar accusations from South Korean companies, the official said by telephone.

"We are investigating whether Qualcomm has used its dominant position in the ... modem chip market, such as discrimination in royalties," said the official, who asked not to be named.

Executives with Qualcomm and Texas Instruments in Seoul declined to comment.

Qualcomm has had an acrimonious relationship with Texas Instruments, its biggest competitor in the mobile phone chip market, and Finland's Nokia Corp., its key client.

"TI and Broadcom filed complaints on June 23. We have been investigating Qualcomm since earlier this year after two domestic companies filed similar complaints," the FTC official said.

He declined to reveal the names of the domestic firms.

The official could not confirm when the investigation of Qualcomm started, but in April the U.S. wireless technology company said it was the subject of an FTC investigation.

Qualcomm dominates the market for technology and chips for code division multiple access, or CDMA, the world's second-most common mobile phone technology after global system for mobile communications, or GSM.

South Korea is home to leading mobile phone makers, including the world's third-biggest, Samsung Electronics Co., and fourth-ranked LG Electronics Inc.

South Korea's mobile service employs the CDMA technology, but Samsung and LG Electronics make GSM phones for export.

In October 2005, six companies -- Texas Instruments, Broadcom, Ericsson, Nokia, Panasonic Mobile Communications and NEC Corp. -- accused Qualcomm of stifling competition in the mobile phone chip market in a complaint filed with European regulators.

The companies alleged Qualcomm had offered preferential terms on royalties for technology patents to manufacturers who also bought its chip sets, a large part of the hardware inside a mobile phone.

At the time, analysts said the actions were unlikely to end up changing Qualcomm's licensing practices.

Qualcomm argued that widespread acceptance of its licensing program demonstrated that its practices were fair, and it noted that it had agreements with five of the six complainants.

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