Qualcomm says S. Korea officials are investigating

San Diego Union-Tribune reports that South Korean antitrust regulators have launched an inquiry into Qualcomm's "business and that of three South Korean companies." According to the article, "investigators from the South Korean Trade Commission visited the South Korean offices of Qualcomm, Samsung Electronics Co., LG Electronics Co. and Pantech Curel, three of the largest South Korean cell phone manufacturers.

South Korea's Yonhap news agency reported that "the commission suspects Qualcomm of abusing its market dominance over local handset manufacturers."

Michael King at Gartner Group wasn't surprised that "Qualcomm and the South Korean cell phone companies had caught the attention of antitrust regulators." He said, "Those guys have always had a very cozy relationship, and that cozy relationship has drawn the ire of other companies. It's typical of what happens when a couple of dominant companies have a relationship with another dominant company."

As the article notes, South Korea has been an extremely important market for Qualcomm, and "the company worked closely with South Korean companies and the government" to help further CDMA.

King said, "They've had quite a position in South Korea for five, 10 years. Qualcomm has helped them leapfrog other countries” in terms of operating next-generation wireless networks that allow high-speed video and data services.

King noted "Qualcomm has made its name not only on its CDMA technology but on its vigorous defense of its patents." He said, "It's not news that Qualcomm has one of the strongest, world-class legal departments."

Michael Cohen at Pacific American Securities in San Diego, said, "I don't see this as a big threat to Qualcomm and its earnings."

King didn't think Qualcomm was "being swept up in anti-U.S. sentiment." He said, "In these cases people want to say it's protectionism, but it's really more about these companies' cozy relationship."