US mobile chip maker Qualcomm on Tuesday said it has agreed to pay a hefty fine of $995 million to China, the biggest in the country's corporate history, following a 14-month-long anti-trust probe into its patent licensing practices in the world's largest smartphone market .
Qualcomm, the biggest supplier of chips used in smartphones, has abused its market dominance, charging discriminatory fees in the Chinese market when licensing mobile chip technology, China's National Development and Reform Commission (NDRC) said.
"Qualcomm's practices hampered innovation and technology development, harmed consumers' rights and interests, and violated China's anti-monopoly rules," NDRC, the top planning body, said in a statement.
The watchdog issued a fine of 8 per cent of the company's revenue in the Chinese market for 2013, totalling 6.09 billion yuan ($995 million), the largest anti-trust fine in China's corporate history.
The NDRC said it started the anti-trust probe in November 2013 and that the fine would stop the company's monopolistic practices, safeguard fair market competition and protect consumers' interests.
Qualcomm improperly bundled unrelated licenses with baseband chip sales, forcing Chinese customers to pay for licenses they didn't need.
San Diego-based Qualcomm said in a statement that it would honour the fine and modify its licensing practices.
"Qualcomm will not pursue further legal proceedings contesting the NDRC's findings," state-run Xinhua news agency reported.
The move could help major Chinese smartphone makers, industry sources said. The company was also quoted as saying in the NDRC statement that it would continue to increase investment in China.
It cooperated with the probe and proposed a set of rectification plans, including not conditioning 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.
The NDRC said it welcomed the company's decision about investing in China and supported the company to charge a reasonable licensing fee for its technology protected by patents.
"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," said Derek Aberle, president of Qualcomm, one of the biggest makers of mobile phone chips.
"We appreciate the NDRC's acknowledgement of the value and importance of Qualcomm's technology and many contributions to China, and look forward to its future support of our business in China," Aberle added.
China has stepped up law enforcement against monopolies in recent years and a number of foreign and domestic companies have been fined for violating the country's anti-trust law.
