European antitrust officials issued a $1.2 billion fine on Wednesday against Qualcomm, the American giant whose technology underpins much of the world’s mobile phone industry, in the latest move by regional regulators against a United States company.
The penalty of 997 million euros follows a two-year investigation into allegations that the company abused a dominant market position in Europe. Officials in Brussels say that Qualcomm offered financial incentives to Apple so that it would buy equipment solely from Qualcomm. Qualcomm can appeal the ruling, which would probably extend a case that was originally announced in the summer of 2015, for years to come.
The decision on Wednesday also bolsters the impression that Margrethe Vestager, Europe’s antitrust chief, has become the world’s most aggressive regulator of the world’s technology sector. In recent years, Ms. Vestager’s office has mounted a concerted campaign against tax avoidance, anti-competitive behavior and the mishandling of private data. In June, it fined Google a record $2.7 billion for unfairly favoring some of its own services over those of rivals.
Those moves have prompted complaints from American technology giants that they are being unfairly targeted, but European Union officials strongly deny the accusations.
In the latest ruling, European regulators found that Qualcomm, the world’s largest maker of smartphone chips, abused its market dominance by preventing rivals from competing in the smartphone chip market thanks to an agreement in which it paid Apple to exclusively use its chips in iPhones and iPads between 2011 and 2016.
“Qualcomm illegally shut out rivals from the market” for a particular kind of microchip, Ms. Vestager said in a news release, “thereby cementing its market dominance.”
“Qualcomm paid billions of U.S. dollars to a key customer, Apple, so that it would not buy from rivals,” she added. “These payments were not just reductions in price — they were made on the condition that Apple would exclusively use Qualcomm’s baseband chipsets in all its iPhones and iPads.”
The European Commission, the European Union’s executive arm, found that Qualcomm’s practices had a significant, detrimental impact on competition in the region. “It excluded rivals from the market and deprived European consumers of genuine choice and innovation,” the commission said.
European regulators are also continuing a separate investigation into preliminary findings that Qualcomm sold its chips at below cost price from 2009 to 2011 to force a competitor out of the market.
The fine on Wednesday comes with Qualcomm in the midst of multiple takeover battles. It has sought to fight off a hostile $105 billion takeover attemptby a rival, the Singapore-based chip maker Broadcom. If completed, that takeover would be the largest technology deal in history. And despite that battle in the background, Qualcomm is still looking to complete a $38.5 billion acquisition of NXP Semiconductors.
Qualcomm has been a longtime leader in cellphone chip technology, and its trove of patents, which include ubiquitous processes such as the way applications are downloaded from smartphone app stores and the use of airplane mode, remains one of the most lucrative assets in the world of wireless networking.
Founded in 1985, the company’s technology helped build the modern mobile phone industry. For decades, Qualcomm engineers have made crucial innovations that have helped the sector develop and expand, and bolstered the company’s results along the way.
But more recently, it has faced a multitude of legal and shareholder issues. The company in 2015 agreed to pay a $975 million fine for violating China’s antimonopoly law. Later that year, an activist campaign within the company forced layoffs. In December 2016, Qualcomm was also fined $850 million in South Korea for unfair patent licensing.
A year ago, the company was hit with separate lawsuits just days apart. First, the Federal Trade Commission filed a complaint against it for charging unreasonable fees to partners like Apple. Then, Apple sued Qualcomm over what it claimed were $1 billion in withheld rebates.