1) Act of charging discriminatory royalty
Licensing its CDMA technology to domestic mobile handset makers including
Samsung Electronics, LG Electronics and Pantech & Curitel, Qualcomm charged
companies that used non-Qualcomm chips discriminatively high royalties.
From April 2004, Qualcomm set royalties in a discriminatory manner ① by
subtracting prices of Qualcomm-made components from selling prices of
mobile handsets for the domestic use, ② lowering the royalty ceiling for
companies using Qualcomm chips, increasing the royalty difference from
those using its competitors’ chips, and ② charging higher royalties on
handsets embedded with non-Qualcomm chips for export than those with
Qualcomm chips.
2) Act of offering loyalty rebates on purchase of modem/RF chip
Qualcomm offered rebates for LG Electronics, Samsung Electronics and
Pantech&Crites on condition that those companies meet most of their
demand for CDMA2000 modem chips or RF chips with its products. If a
company’s purchase of Qualcomm chips reached or exceeded certain
percentage of the buying company’s total chip demand - for instance, the
quarterly purchase from Qualcomm was 75% of the buyer’s total demand for
chips or higher -, Qualcomm offered rebates in proportion to the increase in
the purchase ratio or volume. The following is an example of how Qualcomm
operated its rebate policy.