Decision on CDMA Business Practices Appears to be Based Upon Factual and Legal Errors and Appears to Ignore Substantial Benefits Qualcomm’s Partnerships Generate for Korea’s Wireless IndustrySAN DIEGO
Qualcomm Incorporated (Nasdaq: QCOM) stated today that while it is pleased with the Korea Fair Trade Commission's (KFTC) findings of no violation with regard to much of the complaint brought by the Case Examiner, it firmly disagrees with the KFTC decision that certain discounts and rebates it provides to its Korean customers on the purchase of its CDMA chipsets are in violation of Korean competition law. The decision by the KFTC includes a corrective order relating to the specific practices at issue and an administrative fine of approximately $200 million, however there is no indication of how this figure was calculated other than a reference to Qualcomm's significant Korean revenue. Additional details regarding this decision, including how the KFTC calculated the fine, will not be available until issued by the KFTC in the form of a written decision and order which may take several months. Qualcomm maintains that the findings of violations are based upon serious factual and legal errors, and that the Company's practices are lawful, appropriate and pro-competitive. Qualcomm also believes that the fine is excessive and unwarranted. Qualcomm will appeal the decision to the Korean courts and continue vigorously to defend itself against the claims of unlawful conduct.
“Qualcomm is pleased that, after an investigation of more than three years, the KFTC has decided that there was insufficient evidence to support the multimedia integration claims and that the KFTC rejected all claims relating to conduct regarding WCDMA,” said Donald J. Rosenberg, executive vice president, general counsel and corporate secretary of Qualcomm. “However, the decision appears to have ignored or discounted evidence presented by Qualcomm and its Korean customers that demonstrates that Qualcomm's business practices in Korea have been lawful, highly beneficial to its customers and the Korean wireless industry, and pro-competitive.”
“We are very proud of the long-standing, mutually-beneficial relationships that we have enjoyed with the Korean wireless industry. The discounts and rebates which have been characterized as violating competition law were put in place for the benefit of Korean handset manufacturers. Indeed, our close strategic relationships with Korean wireless handset manufacturers have helped two of our Korean customers join the ranks of the top five suppliers of wireless devices worldwide. We will continue to work with our Korean customers to enable their continued success in the worldwide wireless market.”
Qualcomm has been a key supporter of the development and commercialization of the wireless industry in Korea. The Company's advanced technologies have helped propel our Korean customers to join other licensees as leading suppliers of CDMA equipment and other technologies worldwide. This has resulted in wireless products becoming one of the largest categories of exports from Korea. Since the early 1990s, the Company has worked closely with Korea's Electronics and Telecommunications Research Institute and Korean manufacturers to help establish Korea as a global leader in wireless technology, grow the wireless market and bring the benefits of technology innovation to consumers in Korea and worldwide.
Note Regarding Forward-Looking Statements
All statements included or incorporated by reference in this release, other than statements or characterizations of historical fact, are forward-looking statements. These forward-looking statements are based on Qualcomm's current expectations, estimates and projections about its business, management's beliefs, and certain assumptions made by Qualcomm, all of which are subject to change. Forward-looking statements can often be identified by words such as “anticipates,” “expects,” “intends,” “plans,” “predicts,” “believes,” “seeks,” “estimates,” “may,” “will,” “should,” “would,” “could,” “potential,” “continue,” “ongoing,” similar expressions, and variations or negatives of these words. Examples of such forward-looking statements include, but are not limited to, references to Qualcomm's intent to appeal the decision by the KFTC and to continue to vigorously defend itself against claims of unlawful conduct, Qualcomm's belief that the decision by the KFTC is based on serious factual and legal errors, Qualcomm's belief that its practices are lawful, appropriate and pro-competitive, and Qualcomm's intent to continue to work with its Korean customers to enable their continued success in the worldwide wireless market. These forward-looking statements are not guarantees of future results and are subject to risks, uncertainties and assumptions that could cause actual results to differ materially and adversely from those expressed in any forward-looking statement. Such risks, uncertainties and assumptions include the ability of Qualcomm to successfully appeal the KFTC decision in a timely and cost-effective manner, the assumption that Qualcomm will continue to vigorously defend itself and not otherwise settle on a different course of action or approach, the assumption that the KFTC decision is based on serious factual and legal errors as to which an appeal or other challenge would be successful, the assumption that Qualcomm's practices are lawful, appropriate and pro-competitive, and the assumption that, despite the KFTC decision, Qualcomm will be able to continue to effectively work with its Korean customers to enable their continued success.
In addition, Qualcomm's Annual Report on Form 10-K for the year ended September 28, 2008, subsequent Quarterly Reports on Form 10-Q and other Securities and Exchange Commission filings discuss important risk factors that could affect its business, results of operations and financial condition. The forward-looking statements in this release speak only as of this date. Qualcomm undertakes no obligation to revise or update publicly any forward-looking statement for any reason, except as required by law.
Qualcomm Incorporated (www.qualcomm.com) is a leader in developing and delivering innovative digital wireless communications products and services based on CDMA and other advanced technologies. Headquartered in San Diego, Calif., Qualcomm is included in the S&P 500 Index and is a 2009 FORTUNE 500® company traded on The Nasdaq Stock Market® under the ticker symbol QCOM.
Qualcomm is a registered trademark of Qualcomm Incorporated. All other trademarks are the property of their respective owners.
July 23, 2009
July 23, 2009Korea Fair Trade Commission Dismisses Claims Related to Qualcomm's WCDMA Business Practices and Finds Evidence Relating to Multimedia Integration Insufficient; KFTC Finds Certain CDMA Business Practices in ViolationKorea Fair Trade Commission Dismisses Claims Related to Qualcomm's WCDMA Business Practices and Finds Evidence Relating to Multimedia Integration Insufficient; KFTC Finds Certain CDMA Business Practices in Violation