Europe’s antitrust authorities, whose success in tackling tech firms is being closely watched by peers around the world, just suffered another embarrassing defeat.
On Wednesday morning, the General Court—the part of the Court of Justice of the EU (CJEU) that handles appeals against European Commission decisions—completely annulled a fine of nearly €1 billion that the Commission levied against chipmaker Qualcomm four years ago.
The antitrust fine was for payments that Qualcomm made to Apple between February 2011 and September 2016, to ensure the inclusion of its 4G mobile-broadband chipsets in iPhones and iPads. The fine amounted to 4.9% of Qualcomm’s 2017 revenues.
However, the General Court said the Commission had “committed a number of irregularities when it was putting together the case-file,” such as failing to record the precise content of meetings and conference calls it held with third parties while gathering evidence.
The Commission had also “infringed Qualcomm’s rights of defense” by narrowing the case late in the game and not allowing the U.S. Firm to amend its argument accordingly, the court said.
The court also laid into the Commission’s analysis of whether the payments to Apple actually had anticompetitive effects. “It is apparent from the Commission decision that Apple had had no technical alternative to Qualcomm’s [4G] chipsets for the majority of its requirements during the period concerned, namely that part corresponding, in essence, to iPhones,” the court said in a press release.
“The General Court concludes that the Commission’s analysis was not carried out in the light of all the relevant factual circumstances and that it is, therefore, unlawful,” it said, adding that the Commission had failed to prove Qualcomm’s payments had incentivized Apple not to switch to competitors’ 4G chipsets for certain iPad models.
A spokesperson for the Commission, which can still appeal Wednesday’s ruling, said in a statement that the EU executive “will carefully study the judgement and its implications and will reflect on possible next steps.”
Qualcomm is also currently appealing a €242 million antitrust fine that the Commission’s antitrust department levied in 2019, over predatory pricing.
“We are pleased with the General Court’s decision,” said a Qualcomm spokesperson on Wednesday.
The firm’s victory comes as a time of reinvention, as it reduces its reliance on the mobile market by pushing hard into everything from self-driving cars to the so-called metaverse.
Antitrust vs. General Court
The Commission’s antitrust directorate, which is run by Commission Vice President Margrethe Vestager, often successfully defends its decisions in the General Court—for a recent example, in November it largely prevailed in Google’s appeal against a $2.7 billion antitrust fine.
However, Vestager and her team took a massive reputational hit in 2020, when the General Court slapped down their 2016 decision to order Apple to pay $15 billion in Irish back taxes. The court said then that the Commission had failed to prove how Apple’s Irish tax arrangements gave the company a particular advantage.
Then, in January of this year, the General Court handed Intel victory in its 13-year battle to overturn a $1.2 billion fine from the Commission, over rebates made to personal-computer manufacturers. The legal errors that led to that annulment weren’t Vestager’s fault—her predecessor’s predecessor, Neelie Kroes, was in charge at the time—but it was nonetheless another loss for her division.
All eyes will now be on the General Court’s ruling, scheduled for mid-September, on Google’s appeal against a $5 billion fine that Vestager’s team levied in 2018, over anticompetitive abuses in the Android mobile ecosystem.
This article was updated on June 16 to include Qualcomm’s statement.
