Mobile chipmaker Qualcomm said on Wednesday that the US Federal Trade Commission (FTC) has filed a complaint against the company alleging that its certain business practices are in violation of US competition law.
The FTC, in its complaint in the US District Court in the Northern District of California, said that the San Diego-based company used its dominant position as a supplier of certain mobile phone chips to withhold or threaten to withhold chip supply in order to obtain agreement to unfair or unreasonable licensing terms.
The US agency also accused Qualcomm of refusing to license some standard essential patents to rival chipmakers and of entering into an exclusive deal with Apple Inc.
"Qualcomm's customers have accepted elevated royalties and other license terms that do not reflect an assessment of terms that a court or other neutral arbiter would determine to be fair and reasonable," the FTC said.
In its response, Qualcomm said the portrayal of facts offered by the FTC is significantly flawed and it will "vigorously contest complaint and defend its business practices."
"The complaint seeks to advance the interests and bargaining power of companies that have generated billions in profit from sales of products made possible by the fundamental 3G and 4G cellular technology developed by innovators like Qualcomm," the chipmaker said.
Qualcomm clarified that despite an appeal from members of Congress to refrain from "midnight litigation" with novel and untested legal theories that could damage competition in the US, the FTC accelerated the investigation of Qualcomm and directed the filing of the complaint just days before the change of the Administration though only three of five FTC commissioners are in place.
"This is an extremely disappointing decision to rush to file a complaint on the eve of Chairwoman Ramirez's departure and the transition to a new Administration, which reflects a sharp break from FTC practice," said Don Rosenberg, executive vice president and general counsel, Qualcomm.
Edith Ramirez is the current FTC Democratic chairwoman appointed by the Obama Administration. Ramirez will step down on February 10 as Donald Trump is expected to name Republican Commissioner Maureen Ohlhausen as acting FTC chairwoman and will fill three more vacancies at the agency.
Ramirez and fellow Democrat Terrell McSweeny voted to approve the complaint, but Ohlhausen dissented, saying that the lawsuit was based on a "flawed legal theory ... that lacks economic and evidentiary support."