The Antitrust Debate Surrounding Qualcomm

The Antitrust Debate Surrounding Qualcomm

Qualcomm’s technology licensing practices and modem chip discount agreements with mobile phone suppliers have come under antitrust scrutiny. The U.S. Federal Trade Commission and Apple challenged Qualcomm’s conduct, alleging that Qualcomm abused its market power in modem chips by refusing to license its technology to rivals and that its discount agreements were exclusionary.

Dr. Chipty was one of Qualcomm’s antitrust experts. She assessed Plaintiffs’ asserted markets, claims that Qualcomm had monopoly power, and the competitive effects of the at-issue discount agreements. Her analysis highlighted, among other things, the importance of accounting for technological innovation in the dynamic modem chipset marketplace.

These disputes came to a head in 2019:

  • In Apple v. Qualcomm, the parties settled just as trial began in April 2019. As part of their global settlement, Apple agreed to pay Qualcomm an undisclosed amount and signed a multi-year agreement to purchase Qualcomm’s modem chips.

    Qualcomm’s and Apple’s joint statement on the settlement can be found here. Details on the settlement can be found here.
  • In FTC v. Qualcomm, the District Court ruled against Qualcomm and enjoined it from continuing the challenged conduct. Qualcomm appealed the decision. The Ninth Circuit stayed the injunction, stating “[w]hether the district court’s order and injunction represent a trailblazing application of the antitrust laws, or instead an improper excursion beyond the outer limits of the Sherman Act, is a matter for another day.” The U.S. Department of Justice filed a statement of interest explaining that “Qualcomm is likely to succeed on the merits because the district court’s decision ignores established antitrust principles and imposes an overly broad remedy.”

    The District Court’s ruling can be found here. The Ninth Circuit’s order granting the stay can be found here. The DOJ’s statement of interest can be found here.

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Atrium Health Agrees to Cease Challenged Conduct

Oct 1, 2018

In June 2016, the U.S. Department of Justice and State of North Carolina challenged steering restrictions imposed by Atrium Health (formerly, Carolina’s HealthCare System) on health insurers. According to Plaintiffs, these steering restrictions interfered with health insurers’ ability to offer innovative new products and tools that encourage patients to use lower-cost healthcare providers. The parties reached a settlement in late 2018, in which Atrium Health agreed to end the challenged conduct.

Dr. Chipty was the DOJ’s antitrust liability expert. She submitted testimony that addressed relevant markets, Atrium Health’s market power, and the competitive effects of the challenged conduct.

The DOJ’s press release can be found here. The Final Judgement can be found here.

Disney Agrees to Divest Regional Sports Networks as a Condition for Acquiring FOX Assets

July, 2018

Disney sought regulatory approval to acquire FOX assets, including cable networks, film and television studios, and its 30 percent stake in Hulu. The U.S. Department of Justice conditionally approved the acquisition subject to Disney divesting 22 FOX regional sports networks.

A Matrix Economics team supported an academic economist to evaluate the competitive implications of Disney’s proposed acquisition. A key concern was that Disney would have owned a substantial percentage of revenues associated with cable sports programming. The work was presented to the DOJ and undertaken on behalf of the American Cable Association.

The DOJ’s press release can be found here. The Proposed Final Judgement can be found here.

MOL, K-Line, and NYK Line Receive DOJ Clearance for Joint Venture

April 1, 2018

Japan’s three largest shipping carriers—Mitsui O.S.K. Lines, Kawasaki Kisen Kaisha, and Nippon Yusen—sought regulatory approval for a joint venture called Ocean Network Express (ONE). The U.S. Department of Justice approved the joint venture without condition, and ONE is expected to begin operations in April 2018.

Dr. Chipty analyzed the competitive effects of the proposed joint venture. A key concern was competition along the supply chain for transporting refrigerated produce between the U.S. and Japan. Dr. Chipty’s work was presented before the DOJ on behalf of the parties in the summer of 2017.

Read more about the joint venture here.