Qualcomm has now confirmed a previous report from this morning that it has entered into a settlement with the government of China's National Development and Reform Commission to settle an antitrust dispute. The amount of the settlement will be 6.088 billion Chinese Yuan Renminbi, or about $975 million.
China claimed that after a 14-month investigation, it found that Qualcomm engaged in anti-competitive practices. In addition to the fine, Qualcomm states it will change "certain of its business practices in China". It added, "Although Qualcomm is disappointed with the results of the investigation, it is pleased that the NDRC has reviewed and approved the Company's rectification plan."
Here are the details of Qualcomm's settlement plan with China:
- Qualcomm will offer licenses to its current 3G and 4G essential Chinese patents separately from licenses to its other patents and it will provide patent lists during the negotiation process. If Qualcomm seeks a cross license from a Chinese licensee as part of such offer, it will negotiate with the licensee in good faith and provide fair consideration for such rights.
- For licenses of Qualcomm's 3G and 4G essential Chinese patents for branded devices sold for use in China, Qualcomm will charge royalties of 5% for 3G devices (including multimode 3G/4G devices) and 3.5% for 4G devices (including 3-mode LTE-TDD devices) that do not implement CDMA or WCDMA, in each case using a royalty base of 65% of the net selling price of the device.
- Qualcomm will give its existing licensees an opportunity to elect to take the new terms for sales of branded devices for use in China as of January 1, 2015.
- Qualcomm will not condition the sale of baseband chips on the chip customer signing a license agreement with terms that the NDRC found to be unreasonable or on the chip customer not challenging unreasonable terms in its license agreement. However, this does not require Qualcomm to sell chips to any entity that is not a Qualcomm licensee, and does not apply to a chip customer that refuses to report its sales of licensed devices as required by its patent license agreement.
Qualcomm adds that it will revise its revenue predictions for its fiscal year that ends on Sept. 27, 2015, stating that it now expects to see revenues between $26.3 billion to $28.0 billion compared to its previous guidence of between $26.0 billion to $28.0 billion.
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