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S. Korea steps up probe of U.S. firm

Qualcomm is accused by companies of using its market dominance to seek excessive royalties.

January 05, 2007|From the Associated Press

SEOUL — South Korea's antitrust regulator said Thursday that it had launched a full-scale investigation into alleged unfair market practices by U.S. wireless technology company Qualcomm Inc.

The Fair Trade Commission early last month formed a task force to push forward a probe into allegations that the company used its dominant position in wireless technology to seek excessive royalties, said Shin Yeong-ho, a commission official.

San Diego-based Qualcomm developed and controls most of the key patents for CDMA, or code division multiple access, a rival to the dominant cellular standard GSM, or global system for mobile communications.

CDMA is used in the United States and South Korea. Every cellphone in South Korea has a CDMA chip. The chip maker earns money by collecting royalties from handset manufacturers or licensing the CDMA technology to other chip and phone makers.

South Korean regulators last year received complaints about Qualcomm from Irvine-based Broadcom Corp., Dallas-based Texas Instruments Inc. and two South Korean companies claiming that Qualcomm abused its market dominance.

Shin said that if Qualcomm was found to have abused its position to block competition it could be ordered to take corrective measures, face fines or both.

Qualcomm spokeswoman Emily Kilpatrick said the company would not comment because it had not been notified by South Korean authorities.

In April, when South Korean authorities began investigating Qualcomm, the company said its business practices were "lawful and pro-competitive."

Qualcomm is embroiled in legal and trade disputes with a number of rivals that contend it extracts excessive royalty payments, a claim the company vigorously denies.

South Korea has long been one of Qualcomm's strongest markets, accounting for 32% of $7.53 billion in revenue for its fiscal year that ended Sept. 24.

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