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EU fines Qualcomm $1.2 billion over Apple chip deals

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EU antitrust regulators slapped a 997 million euro (872.91 million pounds) fine on U.S. chipmaker Qualcomm on Wednesday for paying Apple so that the iPhone maker only used its chips, blocking rivals such as Intel.

The European Commission said its investigation, launched in 2015, covered the period from 2011 to 2016 and took into account Qualcomm’s market dominance in LTE baseband chipsets, which enable rapid 4G mobile connections.

“Qualcomm paid billions of U.S. dollars to a key customer, Apple, so that it would not buy from rivals. These payments were not just reductions in price – they were made on the condition that Apple would exclusively use Qualcomm’s baseband chipsets in all its iPhones and iPads,” European Competition Commissioner Margrethe Vestager said in a statement.

“This meant that no rival could effectively challenge Qualcomm in this market, no matter how good their products were,” she said.

The fine represented 4.9 percent of Qualcomm’s 2017 turnover, the Commission said.

Apple and Qualcomm are locked in a wide-ranging legal battle over Qualcomm’s business practices, which started a year ago, with Apple suing Qualcomm for nearly $1 billion in patent royalty rebates that the chipmaker allegedly withheld from the phone maker.

Other regulators, including the U.S. Federal Trade Commission, are also investigating Qualcomm’s dealings with Apple. The EU decision may make Qualcomm more vulnerable to chipmaker Broadcom Ltd’s (AVGO.O) $103 billion hostile bid for it.

Broadcom argues it will smooth rocky relations with customers such as Apple.

The EU competition enforcer is expected to rule in the coming months against Qualcomm in another case involving British phone software maker Icera, which later was acquired by Nvidia Corp (NVDA.O), a person familiar with the matter has told Reuters.

In this case, Qualcomm is accused of selling chipsets below cost to drive out Icera – a practice known as predatory pricing.

(Reporting by Foo Yun Chee, editing by Philip Blenkinsop)

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