(Reuters) — Qualcomm unlawfully suppressed competition in the market for cellphone chips and used its dominant position to impose excessive licensing fees, a U.S. judge ruled, sending the company’s shares down 13 percent in pre-market trade.
“Qualcomm’s licensing practices have strangled competition in the CDMA and the premium LTE modem chip markets for years, and harmed rivals, OEMs, and end consumers in the process,” U.S. District Judge Lucy Koh wrote in a ruling on Tuesday.
Qualcomm’s operating segment relating to its chip and software business is called Qualcomm CDMA Technologies (QCT). Qualcomm’s operating segment relating to the licensing of its patents is called Qualcomm Technology Licensing (QTL).
Koh sided with the U.S. Federal Trade Commission, which in 2017 filed a lawsuit against Qualcomm, accusing the company of using “anticompetitive” tactics to maintain its monopoly on a key semiconductor used in mobile phones.
In its complaint, the FTC said the patents that Qualcomm sought to license are standard essential patents, which means that the industry uses them widely and they are supposed to be licensed on fair, reasonable and non-discriminatory terms.
The FTC complaint also accused Qualcomm of refusing to license some standard essential patents to rival chipmakers, and of entering into an exclusive deal with Apple.
Qualcomm’s licensing practices have been the subject of government investigations in the U.S. since at least 2014 and in Asia and Europe since at least 2009, according to the court filing.
Qualcomm did not immediately respond to a Reuters request for comment.
Shares of the company fell 13% to $67.50 in trading before the bell on Wednesday.