European anti-monopoly regulators fined Qualcomm $1.23 billion Wednesday for making payments to Apple in exchange for exclusively using Qualcomm smartphone radio chips in iPhones between 2011 and 2016.
Qualcomm said it will appeal the fine to the General Court of the European Union.
Qualcomm is embroiled in a fierce legal battle with Apple and global antitrust regulators over its business practices surrounding patent licensing.
The San Diego wireless company already has been fined by regulators in China, South Korea and Taiwan, and it's facing a lawsuit from the U.S. Federal Trade Commission.
The European Commission ruled that Qualcomm abused its market dominance in 4G LTE baseband chips, which link smartphones to cellular networks. Qualcomm's 4G LTE chip was exclusively used in iPhone 4 through iPhone 6 models.
Before the iPhone 4 was introduced in 2011, Qualcomm signed a transition agreement with Apple under which it would make payments to Apple on the condition that only its chips would power cellular connections in iPhones and iPads, according to the commission.
In various lawsuits, Apple and regulators have called those payments rebates, while Qualcomm has referred to them as incentive payments.
"Qualcomm paid billions of U.S. dollars to a key customer, Apple, so that it would not buy from rivals," European Union Competition Commissioner Margrethe Vestager said in a statement. "These payments were not just reductions in price, they were made on the condition that Apple would exclusively use Qualcomm's baseband chipsets in all its iPhones and iPads."
In pending lawsuits, the company has argued that Apple demanded the incentive payments and included the exclusivity language in the agreements itself.
"We are confident this agreement did not violate EU competition rules or adversely affect market competition or European consumers," said Don Rosenberg, Qualcomm's general counsel.
The European Union said the agreement, which was renewed in 2013 and expired in 2016, effectively shut out competitors and discouraged their investment in research and development _ in part because Apple is very large buyer of cellular baseband radios.
The agreement covered a time when Qualcomm had a significant technology lead in 4G LTE, which replaced slower 3G networks.
The company invested heavily in 4G technology during the 2007-09 recession. It came out with a working chip well ahead of rivals such as MediaTek and Intel, which didn't get competing 4G LTE products to market until 2014 and 2016, respectively.
Apple began buying Intel chips in 2016 for roughly half its iPhone 7 models. The commission said Apple's internal documents showed that it delayed making the switch until its agreement with Qualcomm was about to expire.
According to the EU, the agreement made it clear that Qualcomm would stop payments if Apple commercially launched a device with chips supplied by a rival.
In addition to its troubles with Apple and regulators, Qualcomm is fighting a hostile takeover bid from Broadcom and attempting to close its $38 billion acquisition of NXP Semiconductors.
