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FTC abandons Qualcomm antitrust case

Commission gives up on appeal over aggressive licensing claims

The Federal Trade Commission (FTC) has abandoned a four-year antitrust case against Qualcomm due to what acting FTC Chair Kelly Slaughter calls "significant headwinds" in pursuing an appeal against the chip company.

The Commission initially sued Qualcomm in January 2017, claiming it enjoyed an unlawful monopoly in the baseband processors that allow smartphones and other cellular devices to communicate via radio networks. The complaint accused the company of exclusionary conduct, taxing its competitors' baseband processor sales, and reducing their ability to innovate.

The complaint said that Qualcomm, which sells its chips and licenses its chip designs, imposed anti-competitive supply and licensing terms on phone manufacturers. The company threatened to disrupt baseband processor supplies to secure elevated royalties for patents it declared essential to industry standards, the FTC said, calling this a “no license, no chips” policy.

At the time, Commissioners voted 2-1 to pursue the complaint, with Commissioner Maureen K. Ohlhausen dissenting in what she called an "extraordinary situation.” She warned that the FTC's case would disrupt intellectual property rights in the US and asserted a "dearth of evidence" in the case.

The FTC won the case initially in 2019, in the Northern District of California. However, Qualcomm appealed and a three-judge panel in the Ninth Court of Appeals overturned the decision in August last year. 

The Commission requested an En Banc rehearing of the case, which would have enabled all the judges in the court to consider the appeal rather than just the original three. That request was denied.

Announcing the decision on Monday, Slaughter said the Commission would not petition the Supreme Court to appeal the case.

"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," she said.

"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."

Abandoning the move will be a setback to an FTC that’s been increasingly aggressive against big tech recently. It sued Facebook for anti-competitive practices in December, days after launching a widespread investigation into various tech companies' practices. President Biden also recently nominated an antitrust advocate, Lina Khan, as FTC commissioner.

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