South Korea Fines Qualcomm (QCOM) Over $850 Million For Abuse Of Market Dominance

South Korea’s antitrust regulator, the Fair Trade Commission, imposed Wednesday a massive fine of 1.03 trillion won (almost $853 million) on U.S. cellular phone chipmaker Qualcomm Inc. The penalty, which is the single-highest ever imposed by FTC, was announced after the agency determined that the San Diego, California, company abused its market dominance.

“The FTC orders Qualcomm to take corrective measures against its power abusing business and imposes 1.03 trillion won in fines. The decision is aimed at putting right Qualcomm’s unfair business model,” FTC reportedly said in a statement.

Qualcomm owns numerous essential patents in the CDMA (code division multiple access) and LTE (long-term evolution) mobile standards, and charges mobile companies and other chipmakers royalties for using them. According to reports, Qualcomm makes most of its profit from royalty licenses alone, which amounted to $6.5 billion in its latest financial year.

The FTC said the company refused to share patent rights with other chipmakers and given its dominant position in the market, forced them to sign unfavorable contracts, paying them nothing for their patents.

“Qualcomm has taken a contradictory stance, as it received comprehensive licenses from handset companies but never offered its rights to its chip rivals. As a result, Qualcomm’s chipset became a perfect product that is safe from any patent suits, but its rivals’ products had copyright flaws. The company gained a decisive edge in the market,” the FTC statement reportedly said.

In a statement, Qualcomm called the penalty “an unprecedented and insupportable decision,” which the company “strongly disagrees with.” It also said the chipmaker would file an appeal against the decision, as well as the amount of the fine and the methodology used to determine it.

Don Rosenberg, executive vice president and general counsel, Qualcomm, said in the statement: “For decades, Qualcomm has worked hand in hand with Korean companies to foster the growth of the wireless Internet. Qualcomm’s technology and its business model have helped those companies grow into global leaders in the wireless industry. This decision ignores that win-win relationship.”

The FTC decision will take affect once it issues a written order, which can take up to six months. Qualcomm will file its appeal once it receives the written order, but will have to pay the fine within 60 days of the receipt. If it wins its appeal or even a partial reprieve, the company will receive a refund from the FTC.

The probe against Qualcomm in South Korea began in 2014. The company has been subject to similar investigations and fines elsewhere in the world too. After a 14-month probe, China fined Qualcomm $975 million in February 2015, while regulators in Taiwan, the European Union and the United States are all investigating the company for violations of competition laws.

Shares of Qualcomm were up 0.58 percent during Tuesday trade on Nasdaq, but fell 0.15 percent during after-hours.