Apple-Qualcomm Settlement Expected to Stand Despite FTC Ruling

(Bloomberg) -- Apple Inc. and Qualcomm Inc.’s settlement of a two-year legal battle and their ongoing licensing-and-supply agreement will remain in force despite a ruling by a California judge against the chipmaker, according to people familiar with terms of the arrangement.

U.S. District Judge Lucy Koh sided Tuesday with the Federal Trade Commission in a case brought in 2017 accusing Qualcomm of anti-competitive practices. The ruling comes one month after Qualcomm and Apple settled a similar lawsuit brought by the iPhone maker.

Qualcomm Will appeal Koh’s ruling and ask for a stay. The judge sided with almost all of the FTC’s arguments that the company violated antitrust rules. She said that Qualcomm should renegotiate existing licenses with phone makers and abused its strength as the largest provider of chips that connect smartphones to cellular networks. Qualcomm unfairly threatened to withhold supply of its products to force phone makers to sign up for artificially inflated licensing payments, she argued.

There are no provisions in the deal between Apple and Qualcomm that allowed for a reversal or change in the event the FTC won its case against the chipmaker, according to one of the people.

Analysts speculated, following the announcement of the ruling late Tuesday, that the Apple agreement might be automatically invalidated.

To contact the reporters on this story: Ian King in San Francisco at ianking@bloomberg.net;Mark Gurman in San Francisco at mgurman1@bloomberg.net

To contact the editors responsible for this story: Tom Giles at tgiles5@bloomberg.net, Andrew Pollack, Alistair Barr

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