Among the urgent issues facing President Trump’s nominees for vacant FTC seats is one that is unique in its scope.
Republicans Joe Simons, Noah Phillips and Christine Wilson along with Democrat Rohit Chopra are slated for a Senate confirmation hearing tomorrow.
If approved, they will inherit the FTC’s civil antitrust action against Qualcomm.
And the new commissioners’ moves in the matter will have far-reaching implications for consumers nationwide.
The FTC’s challenge to Qualcomm’s business practices is critical – it relates to certain chipsets in smartphones that consumers use every day.
Dropping the Qualcomm case … would be a huge mistake.
Protecting intellectual property rights is very important, but Qualcomm has gone too far by using its intellectual property to protect its monopoly.
The Ongoing Lawsuit Against Qualcomm
In January 2017, after a two-year investigation, the FTC brought its civil antitrust action against Qualcomm for the tactics it employed to abuse its monopoly power.
At the core of the FTC’s suit is the allegation that Qualcomm has been involved in a number of inter-related and mutually reinforcing anti-competitive practices.
One such practice is Qualcomm’s refusal to license its standard essential patents (SEPs) to chipset competitors despite its commitment to use fair, reasonable and non-discriminatory (FRAND) terms. The company also enters exclusive deals with big smartphone manufacturers like Apple to cripple other chipset suppliers.
These business practices work stifle innovation by locking competitors out of the market.
Most importantly, less competition means higher prices for consumers because there are fewer product options to choose from.
The FTC’s suit also challenges Qualcomm’s ‘no license, no chips’ policy, which conditions access to Qualcomm’s chipsets on the execution of a license to Qualcomm’s complete patent portfolio that has unfair and unreasonable terms.
This kind of double-dipping (charging customers twice for the same chip) results in unfairly excessive royalties for chipset purchasers – a cost that ultimately gets passed down to consumers.
And Qualcomm’s controversial business practices don’t end there: there are allegations that the company also demands free cross-licenses from licensees, includes “no challenge clauses” in its patent licenses, and engages in predatory pricing.
Protecting against these specific intellectual property licensing tactics will not chill intellectual property rights. Furthermore, since Qualcomm has no U.S.-based production, allowing them to entrench their monopoly does not promote U.S. investments and future job creation and development.
Antitrust Actions on a Global Scale
The FTC is not alone in raising such concerns about Qualcomm’s anticompetitive business practices.
Antitrust enforcement agencies in Europe, China, South Korea and Taiwan have all concluded, after lengthy investigations, that Qualcomm’s anti-competitive behavior was illegal – and they levied hefty fines against the company.
Indeed, every antitrust regulator that has concluded its investigation has found that Qualcomm abused its dominant position by engaging in a multitude of anti-competitive practices.
As members of the Senate Commerce Committee consider President Trump’s nominees to the FTC, they would be wise to keep in mind that the Commission’s lawsuit against Qualcomm is ongoing – and hugely important.
The new commissioners must stay the course and embrace this antitrust action. Otherwise, consumers will ultimately pay the price and U.S. innovation will suffer.