Qualcomm is defending a £480 million case in London’s Competition Appeal Tribunal (CAT) that alleges it overcharged Apple and Samsung due to its market power, with the extra charges passed along to consumers.

The case, brought by consumer group Which? in 2021, alleges around 29 million people who bought Apple or Samsung devices since 2015 are due for compensation, estimated at about £17 each if the case succeeds.

Which? alleges that Qualcomm used its market power in smartphone chips to pressure Apple and Samsung into paying inflated royalties even if its chips are not used in a particular device, under the company’s so-called no-licence, no-chips policy.

Legal battle

The policy amounts to an “industry-wide private tax which ensures higher profits for Qualcomm and inflates the cost of devices”, Which? lawyers said in court documents.

Qualcomm said the allegations mischaracterise its long-standing requirement for companies to obtain a licence for its standard essential patents before they can be permitted to buy chipsets.

In court documents Qualcomm’s lawyers rejected the allegation that it could pressure Apple and Samsung to pay royalties, as the companies “can and do exert enormous buyer power”.

The trial, which began on Monday and is expected to last five weeks, will initially focus on whether Qualcomm held market power and, if so, whether it abused a dominant position.

If successful, a second stage would focus on seeking damages from Qualcomm, although such a stage could take years to reach its conclusion.

“This trial is a huge moment. It shows how the power of consumers – backed by Which? – can be used to hold the biggest companies to account if they abuse their dominant position,” said Which? chief executive Anabel Hoult.

Abuse allegations

Qualcomm is one of the most significant providers of mobile chips, and has faced allegations of anti-competitive conduct in the past.

A similar case is ongoing in Canada and Qualcomm has been fined by the EU for anti-competitive practices.

A case brought by the FTC in 2017 over Qualcomm’s licensing practices resulted in a favourable verdict in 2019, but the verdict was reversed on appeal, with the Ninth Circuit appeals court saying the FTC had failed to prove that Qualcomm’s policies had a negative effect on consumers.

Apple previously sued Qualcomm in 2017 over allegedly unfair royalty payments demanded by the chip company, but the companies settled out-of-court in 2019.