A Comparative and Economic Analysis of the US FTC’s Complaint and the Korea FTC’s Decision Against Qualcomm

Posted by Social Science Research Network

A Comparative and Economic Analysis of the US FTC’s Complaint and the Korea FTC’s Decision Against Qualcomm

By Koren W. Wong-Ervin, Scott Robins, Ariel Slonim, Douglas H. Ginsburg (George Mason University) &  Anne Layne-Farrar (Northwestern University)

Abstract:     On January 17, 2017, the US Federal Trade Commission (FTC) filed a lawsuit against Qualcomm Incorporated based on a “monopoly broth” or course of conduct theory for alleged monopoly maintenance in certain narrowly defined baseband processor markets. The vote to file the complaint was 2-1 over the dissent of now-Acting Chairman Maureen Ohlhausen, who described it as “an enforcement action based on a flawed legal theory (including a standalone Section 5 count) that lacks economic and evidentiary support, that was brought on the eve of a new presidential administration, and that, by its mere issuance, will undermine US intellectual property rights in Asia and worldwide.”

In a jurisdiction on the other side of the globe, the Korean Fair Trade Commission (KFTC) had issued an administrative decision against Qualcomm on December 28, 2016, concluding that the company employed an “unfair business model” with respect to the licensing of its 2G (CDMA), 3G (WCDMA), and 4G (LTE) standard-essential patents (SEPs) and the sale of its baseband processors, and imposed global portfolio-wide remedies and a fine of KRW 1.03 trillion (approx. US $853 million).

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