South Korea accuses Qualcomm of trade violations, company says

[SAN FRANCISCO] South Korea's Fair Trade Commission accused Qualcomm Inc. of violating local competition law in the way it licenses technology to customers, the chipmaker said.

The regulator proposes fining the chipmaker and forcing it to modify its business practices, Qualcomm said on Tuesday in a statement. The commission sent a "case examiner's report" to the US company, beginning the process of allowing Qualcomm to respond to the allegations.

"The allegations and conclusions contained in the examiner's report are not supported by the facts and are a serious misapplication of law," Qualcomm said. "Our patent licensing practices, which we and other patent owners have maintained for almost two decades, and which have facilitated the growth of the mobile communications industry in Korea and elsewhere, are lawful and pro-competitive."

Qualcomm gets the majority of its profit from licensing patents that cover some of the fundamental technology of modern phone networks.

The chipmaker has faced regulatory challenges across the globe and earlier this year paid a fine and agreed to charge a smaller percentage on locally sold handsets in China. The company also is the subject of regulatory investigations in the US and Europe.

South Korea is home to Samsung Electronics Co. and LG Electronics Inc., the nation's biggest consumer-electronics makers and among Qualcomm's top three customers.

The San Diego- based chipmaker charges fees based on the selling price of handsets, which South Korea is now challenging. The commission argues that the fee should be based on the price of the semiconductor component that uses the technology.

Qualcomm said the process of fighting its case with the Korean regulator will "take some time," without being more specific, and it didn't specify the potential size of the fine. The Fair Trade Commission declined to comment on the case.

BLOOMBERG