What You Need To Know About The FTC Win Over Qualcomm

Qualcomm Inc. QCOM stock plummeted Wednesday morning following reports the Federal Trade Commission has won the antitrust case against Qualcomm in the Northern District of California.

What Happened

The FTC states that the San Diego-based chipset maker violated the FTC Act, and unlawfully suppressed competition in the market for cellphone chips and used its dominant position to exact excessive licensing fees.

Federal Judge Lucy Koh supported the FTC's view that Qualcomm abused its market dominance in the market for semiconductors that connect modems and smartphones. Judge Koh's summary of her conclusions on anticompetitive conduct and harm are as follows:

"In combination, Qualcomm’s licensing practices have strangled competition in the CDMA and premium LTE modem chip markets for years, and harmed rivals, OEMs, and end consumers in the process. Qualcomm's conduct 'unfairly tends to destroy competition itself.”

What's Next

Qualcomm must renegotiate existing licensing agreements and submit to seven years of compliance monitoring.

Qualcomm's stock was trading down 11.4 percent at $68.90 per share.

Related Links:

Why Qualcomm May Be Able To Sell To Huawei

Qualcomm Beats Street On Q2 Earnings, But Offers Lower Guidance

Photo courtesy of Qualcomm.