Qualcomm given record £631m fine in Chinese anti-monopoly case

China has fined the chipmaker Qualcomm 6bn yuan (£631m) in a wave of anti-monopoly penalties that have rattled foreign companies.

US-based Qualcomm abused its dominance in wireless technology to charge manufacturers “unfairly high” licensing fees, a cabinet agency said on Tuesday.China is the world’s biggest producer of mobile phones and other wireless devices, and Beijing has complained about the high cost of technology licenses.

China has begun a series of anti-monopoly investigations over the past two years against foreign carmakers, technology suppliers and other companies in an apparent effort to force down prices. Business groups say the secretive way the investigations are conducted is alienating companies, but regulators deny they are treated unfairly.

Qualcomm, one of the biggest makers of chips used in mobile phones, said on Monday it had also agreed to change some of its practices for licensing technology to Chinese companies. The company, based in San Diego, California, expressed disappointment with the findings by the Chinese cabinet’s national development and reform commission (NDRC), but said it would not contest the matter.

The fine was the highest imposed to date by Chinese authorities on a foreign company. In September 2014, the British pharmaceutical company GlaxoSmithKline was fined 3bn yuan (£315m) in a bribery case.

The NDRC said Qualcomm improperly bundled unrelated licences with mobile phone technology, forcing Chinese customers to pay for licenses they did not need. “Qualcomm’s acts to eliminate or restrict market competition, hinder and inhibit technological innovation and development and harm the interests of consumers violate China’s anti-monopoly law.”

Qualcomm said it would offer licences for its current 3G and 4G Chinese patents separately from those to its other patents. It also will give existing licensees in China an opportunity to adopt the new terms for sales of branded devices for use in China going back to 1 January.

Derek Aberle, president of Qualcomm, said in a statement: “We are pleased that the investigation has concluded and believe that our licensing business is now well positioned to fully participate in China’s rapidly accelerating adoption of our 3G/4G technology.”

Qualcomm makes most of its profit from licensing fees paid by companies that use its chips. China accounts for about half the company’s revenue. The NDRC said the fine was calculated on the basis of 8% of Qualcomm’s 2013 revenue in China.