South Korea's antitrust authorities have charged telephone maker Qualcomm Inc with unfair licensing terms, in addition to charges the company has acknowledged, a source briefed on the matter said on Thursday.
The Korean Fair Trade Commission has charged Qualcomm with setting unreasonable and discriminatory terms for licensing its patents, said the source, who asked not to be named because he was not authorized to speak publicly about the issue.
Qualcomm has said publicly that the charges by the KFTC relate to its integration of multimedia products into its chipsets and rebates and discounts it gives chip customers.
The charges are significant for Qualcomm, which has listed South Korea as a key geographic region for revenue because its customers there are among the world's largest producers of mobile phones.
The KFTC has been investigating Qualcomm for three years.
Two U.S. chip makers, Texas Instruments Inc, Broadcom Corp, have complained about its actions, Qualcomm has said.
It has also said that privately held South Korean companies Nextreaming Corp and Thin Multimedia Inc have filed complaints against it with the KFTC.
We stand by our characterization of the allegations as stated when the Case Examiner's Report was issued, Qualcomm spokeswoman Christine Trimble said in an email.
The case examiner's report is the collection of formal charges brought against the company by the KFTC.
The large producers of mobile phones in South Korea are Samsung Electronics Co Ltd, LG Electronics Inc and privately held Pantech.
The KFTC makes antitrust allegations, investigates them, and rules on them. It held a further day of hearings this week regarding Qualcomm, and the source said that two more days of hearings had been set and a decision was expected in July.
If found to have committed the violations, Qualcomm could be fined, and required to change its business practices and advertise the changes in newspapers.
Mobile phone handset chipsets, which send and receive voice and data, are built on international standards. When Qualcomm's patents were folded into those standards, it promised to license them on fair, reasonable and non-discriminatory terms.
The source said the KFTC has accused Qualcomm of violating South Korean antitrust law by breaking that commitment, harming chipset competition and causing consumers to pay more for handsets.
South Korean media estimate Qualcomm's revenue from Korean makers at 2.5 trillion won to 3 trillion won ($2 billion to $2.4 billion).
Qualcomm has also been under investigation by the European Commission in Brussels for anti-competitive behavior.
Qualcomm shares were at $45.25 after hours, after closing up 19 cents at $45.28.
(Reporting by David Lawsky, additional reporting by So-eui Rhee in Seoul; editing by Andre Grenon)