Top tech companies complain to EU about Qualcomm

STOCKHOLM/NEW YORK (Reuters) - Six companies including Ericsson, Nokia and Texas Instruments on Friday accused Qualcomm Inc of stifling competition in the mobile phone chip market in a complaint filed with European regulators.

It is the latest legal challenge against the wireless company, which dominates the market for chips used in US mobile phones. It also sells licences and chips for the latest cell phone technologies being widely adopted in Europe.

The companies allege Qualcomm had offered preferential terms on royalties of technology patents to manufacturers who also bought their chipsets -- the hardware inside a mobile phone.

Charter Equity analyst Ed Snyder believes the actions are unlikely to end up changing Qualcomm's licensing practices.

He said Qualcomm has survived many legal challenges since its inception 20 years ago and has had an acrimonious past with companies such as Nokia, Ericsson and Texas Instruments.

"Uncertainly always pressures valuations," said Snyder.

The company said it had not seen the complaints but described the allegations as "factually inaccurate and legally meritless" and said it would defend itself against any claim of unlawful conduct.

The wireless technology firms, which also include Broadcom Corp, Panasonic Mobile Communications and NEC Corp, accused Qualcomm of trying to exclude rivals from the market for chips based on a high-speed wireless standard being used in phones in Europe and other parts of the world.

Broadcom is pursuing a similar case in the United States.

The companies "believe Qualcomm's anti-competitive behaviour has harmful effects for the mobile telecommunications sector in Europe, as well as elsewhere, because carriers and consumers are facing higher prices and fewer choices," according to a statement.

They alleged Qualcomm overcharged for patent royalties in their complaint to the European Commission, which enforces competition rules in the 25-nation European Union.

Qualcomm argued that widespread acceptance of its licensing program demonstrates that its practices are fair and it noted that it had agreements with five out of the six complainants.

Harris Nesbitt analyst John Bucher said he had not seen the complaints but that it was not obvious that the companies had a strong anti-competition case.

"If the complaint is that they're charging one company a higher royalty rate than another, that does not appear to me to be anti-competitive. That's symptomatic of licensing practices in a number of technology industries," he said.

Bucher has an outperform rating on Qualcomm and benefits from a trust that holds shares of the company.

Deutsche Bank analyst Brian Modoff said it was impossible to determine the outcome of the complaints.

"We've seen this war before," he said referring to disputes among Qualcomm and Nokia and Ericsson in the 1990s over the development of standards for high-speed wireless technology.

An executive for Ericsson, the world's biggest wireless network gear maker, said in a statement that Qualcomm was charging "excessive and disproportionate royalties".

Officials from the firms said they were focusing their action on Europe as it is currently the most important market for the high-speed technology, known as W-CDMA, that is under dispute.

Texas Instruments Inc. is Qualcomm's biggest competitor in the market for mobile phone chips and Nokia is its biggest client.

The EC said it would examine the complaints.

Additional reporting by Rex Merrifield in Helsinki and Robert MacMillan in New York.

collaboration ericsson eu networking nokia qualcomm texas instruments ti