Question

Qualcomm Faces European Competition Probe over Claims of Predatory Pricing. The European Union Competition Chief said: “ We are launching these investigations because we want to be sure that high-tech supplies can compete on the merits of their products” Qualcomm responded that the claims were “without merit”. On similar grounds, Qualcomm was fined in China for a bit below one billion dollars. Please, read this article: Qualcomm Faces Scrutiny over Antytrust Allegations. Hint: To answer the following questions you may consider Parkin pages 234, 235, 325, and 355.

a. Qualcomm is a US company. Hence, why do the Europeans and China want to fine Qualcomm? Should US companies be under the umbrella of US authorities?

		Companies should comply with their national rules.
		Companies should comply with the rules of the markets where they operate.

Answer 1

Qualcomm is the world’s largest supplier of baseband chips. which connect mobile phones and tablets to cellular networks.

Europe and China fined Qualcomm because it was found out that Qualcomm used its excess market power and dominant position to drive competitors out of business. It was found that Qualcomm reduced its prices below the market prices in order to drive out the domestic producers out of market. Such a practice is not allowed by law as it hinders competition and efficiency in the market. Hence, the company Qualcomm was subject to antirust regulations and fines.

Companies should comply with the rules of the markets where they operate.

If the US company is operating inside US, it must follow US guidelines and if it is operating outside the US borders, it must follow the rules and regulations of the market they are operating in.