Mobile chip firm denies link to European investigation

Korean trade regulators have raided the local offices of US mobile phone chip developer Qualcomm, and Korean phone makers Samsung, LG Electronics and Pantech Curitel, in an apparent antitrust inquiry.

The action follows complaints from a local software developer that Qualcomm unfairly abused its dominance in the telecoms chip market to cut competitors out of the mobile video software market, local media reported.

Officials from the Korean Fair Trade Commission (KFTC) swooped unannounced on Qualcomm's Seoul office on Wednesday afternoon, examining files on sales department PCs and demanding that sales staff return to the office for questioning, Korea's Electronic Times reported.

Qualcomm developed and patented a significant proportion of the core technology used in the mobile phone industry which it licenses to phone makers.

The company, which earned $2.1bn in South Korea last year, confirmed that the raids took place and that they appeared to be related to a complaint filed by a small local company.

"The KFTC advised that the inquiry was not an official investigation but declined to provide an explanation of the reason for the inquiry or its focus," Qualcomm stated.

The head of the KFTC's anti-monopoly team told Korea's Electronic Times: "We suspect that Qualcomm may have abused its market-dominating power. We cannot comment on any details of the ongoing investigation."

Qualcomm president Steve Altman said in a statement to the media: "Qualcomm's business practices are lawful and pro-competitive."

Qualcomm is involved in multiple legal battles relating to patent infringement claims in Europe and the US, and has seen off several such challenges in the past.

The company's competitors have also called for regulatory action in Europe and the US to address alleged abuse of Qualcomm's dominant market position.

In a press statement, Qualcomm attempted to draw a line between the Korean inquiry and the European complaints.

"The KFTC has not said that the inquiry is related in any way to complaints lodged with the European Commission last year by six companies based outside Korea," the firm said.

In China, the government's concern over high patent licensing fees and royalties paid to Qualcomm and other foreign companies has driven the development of a home-grown technology standard for 3G mobile phones, TD-SCDMA.

Qualcomm, however, has insisted that its patent portfolio also covers elements of this standard.

The company's financial filings reveal that some $2.1bn, or 37 per cent, of Qualcomm's $5.6bn revenue for 2005 came from South Korean firms.

The country is the largest single user of Qualcomm's technology, and Qualcomm makes a large part of its income from mobile phone technology royalty and licence fees.

Korea's trade authorities have also investigated other prominent foreign technology companies recently, most notably Microsoft and Intel.

They appear to have the power to enforce their rulings. After an investigation lasting four years, KFTC regulators recently accused Microsoft of anti-competitive actions, fined the company and demanded that it make changes to the Windows operating system. Microsoft is appealing against this decision.