Final Report of the Hearing Officer — Qualcomm (Exclusivity payments) (AT.40220)
Date: 2018-01-23
Institutions: Directorate-General for Competition, European Commission
Subjects: Internet, control of restrictive practices, dominant position, electronics industry, horizontal agreement, mobile phone








C_2018269EN.01001501.xml










31.7.2018   


EN


Official Journal of the European Union


C 269/15






Final Report of the Hearing Officer (1)

Qualcomm (Exclusivity payments)
(AT.40220)
(2018/C 269/15)

Introduction









(1)


The draft decision concerns the grant of payments by Qualcomm Inc. (‘Qualcomm’) to Apple Inc. (‘Apple’) on condition that Apple obtain from Qualcomm all of Apple's requirements of baseband chipsets compliant with the ‘Long-Term Evolution’ (LTE) cellular communications standard together with the older ‘Global System for Mobile Communications’ (GSM) and ‘Universal Mobile Telecommunications System’ (UMTS) standards. According to the draft decision, this infringed Article 102 TFEU and Article 54 of the Agreement on the European Economic Area.












(2)


In August 2014, the Commission, on its own initiative, began an investigation into arrangements relating to the purchase and use of Qualcomm's baseband chipsets. Between 12 August 2014 and 23 July 2015, the Commission sent various requests for information under Article 18(2) and (3) of Council Regulation (EC) No 1/2003 (2).












(3)


On 16 July 2015, the Commission initiated proceedings, within the meaning of Article 11(6) of Regulation (EC) No 1/2003 and Article 2(1) of Commission Regulation (EC) No 773/2004 (3), in respect of Qualcomm.












(4)


On 8 December 2015, the Commission adopted, for the purposes of Article 27(2) of Regulation No 1/2003 and Article 10(1) of Regulation No 773/2004, a statement of objections addressed to Qualcomm (the ‘SO’). In essence, the SO sets out the Commission's provisional conclusion that, absent any objective justification or efficiency gains, Qualcomm was abusing its dominant position by granting payments to Apple on condition that Apple obtain from Qualcomm all of Apple's requirements of baseband chipsets compliant with: (i) the UMTS and GSM standards; and (ii) the LTE standard together with the older UMTS and GSM standards.












(5)


Also on 8 December 2015, the Commission Directorate-General for Competition (‘DG Competition’) emailed to Qualcomm an informal advance courtesy copy of the SO. The SO was sent by courier to Qualcomm the following day. According to the covering letter dated 9 December 2015 sent with the SO, Qualcomm was to have three months in which to respond in writing. This period was stated to take ‘into account the size and nature of the file, the content of the [SO], the fact that on the same day a Statement of Objections against [Qualcomm] in case AT.39711 – Qualcomm (predation) has been adopted, and the forthcoming holiday period’. It would start running, if Qualcomm requested access-to-file within five working days after notification of the SO, ‘from the day following the receipt of the CD-ROM/DVD with the accessible part of the file’.












(6)


Qualcomm received formal notification of the SO by courier on 11 December 2015. Following Qualcomm's request of 18 December, on 21 December 2015 the Commission provided Qualcomm, for the purposes of access-to-file in accordance with Article 27(2) of Regulation No 1/2003 and Article 15 of Regulation No 773/2004, with documents saved on an electronic storage device.





Access-to-file following the SO and the period for responding to the SO


Exchanges between Qualcomm and DG Competition









(7)


By letter to DG Competition dated 29 January 2016, Qualcomm complained about confusing document-referencing, took issue with what it considered to be over-extensive and uninformative redactions in the accessible versions of the documents it received, and expressed surprise at the apparently small number of documents from Apple among those documents.












(8)


DG Competition responded by letter dated 19 February 2016. It clarified and corrected some referencing issues and explained, among other things, that a mismatch between the number of documents listed as being in certain ‘document collections’ (4) on the investigation file and the number of non-confidential versions in the accessible version of these collections made available on 21 December 2015 was due to three information providers having claimed confidentiality over the entirety of some documents. For some redacted texts, DG Competition considered that fuller non-confidential summaries were not required.












(9)


By emails of 19 February, 26 February and 3 March 2016, DG Competition provided Qualcomm with: (i) redacted versions of some previously non-accessible documents; (ii) updated redacted versions of other documents that had already been provided; and (iii) summaries of (parts of) certain documents that were claimed by their providers to be confidential in their entirety.












(10)


In a letter to DG Competition dated 4 March 2016, Qualcomm maintained that it had received access to an incoherent and incomplete version of the case file, containing many documents in which extensive and unjustified redactions had been made to passages likely to be important to its defence. The letter included an extensive annex with detailed requests for further access-to-file.












(11)


On 7 March 2016, Qualcomm wrote to DG Competition requesting ‘an extension of the deadline for Qualcomm to respond to the [SO]’. Qualcomm argued that, in view of ‘serious and on-going problems’ with access-to-file, the three-month period laid down in the cover letter of the SO for responding to the SO had not yet started to run. In the alternative, Qualcomm requested ‘at least a three-month extension of the deadline … (i.e. until at least 22 June 2016)’.












(12)


By letter dated 16 March 2016, DG Competition responded to Qualcomm's two previous letters. Regarding access-to-file, DG Competition provided revised non-confidential versions of some documents, rejected Qualcomm's requests for others and stated that there were no open issues concerning referencing, confidentiality or allegedly missing documents. Regarding the deadline for responding to the SO, DG Competition differed with ‘Qualcomm's characterisation of a significantly deficient access to file exercise’ but granted a ‘one-month extension’ and set a ‘new deadline’ of 22 April 2016, ‘to take account of the additional time that Qualcomm might have needed to review the documents provided after 22 December 2015’.












(13)


By letter to DG Competition dated 21 March 2016, Qualcomm criticised the positions outlined in DG Competition's letter of 16 March 2016 and indicated that Qualcomm would ‘seek determination from the Hearing Officer’ regarding access-to-file and the deadline for Qualcomm's response to the SO.





Qualcomm's requests to the Hearing Officer concerning the SO response deadline









(14)


By letter to the Hearing Officer dated 21 March 2016, Qualcomm requested a ‘review of the deadline set by [DG Competition] to respond to the [SO]’. Qualcomm sought in this context a ‘determination that the original three-month deadline … either (i) ha[d] not yet started to run; or (ii) began to run on 20 February 2016 at the very earliest’. In the alternative, Qualcomm sought an ‘extension of the current deadline … until 22 June 2016; i.e. three months from the original deadline’.












(15)


By letter to the Hearing Officer dated 6 April 2016, Qualcomm requested further access to a large volume of material on the Commission's file. It provided ‘Annex 2’ of that letter two days later. This access-to-file request (the ‘April 2016 Request’) and others, as well as how they were dealt with, are described later in the present report.












(16)


By email to Qualcomm dated 15 April 2016, the Hearing Officer suspended as of 6 April 2016 (the date of the April 2016 Request) the running of the time period for responding in writing to the SO. That email indicated that, once the Hearing Officer considered it appropriate to lift this suspension, further directions could be made concerning a new deadline for the submission of such a response and any related matters.












(17)


By letter to Qualcomm dated 27 May 2016, the Hearing Officer described various steps taken to deal with the April 2016 Request (5). In view of these, the Hearing Officer lifted that suspension and added, to the time that remained of the period for responding in writing to the SO as of the date of suspension, an additional period bringing the deadline for such response to 23 June 2016.












(18)


By letter dated 30 May 2016, Qualcomm took issue with that revised deadline. Alluding to its letter to the Hearing Officer of 21 March 2016, Qualcomm reiterated the view that ‘the original three-month deadline … did not start to run on 21 December 2016’. Adding three months to the dates when certain external advisers of Qualcomm had had access to certain documents as part of a ‘data room procedure’ (see (26) below), Qualcomm submitted that ‘the deadline for responding to the SO [could] be no earlier than 24 August 2016’. In the alternative, Qualcomm sought ‘an extension to the current deadline … until at least 25 July’. Qualcomm also asked the Hearing Officer to confirm ‘in any event’ the date on which Qualcomm could be considered ‘to have received sufficient access to file that the initial three-month period granted to Qualcomm … commenced’.












(19)


By email to DG Competition dated 1 June 2016, having viewed the last additional passages of unredacted text to which, in the Hearing Officer's assessment (see below), Qualcomm was entitled to access, Qualcomm's lawyers indicated that, since in their view these passages contained ‘key exculpatory evidence’, they considered that access-to-file had been granted at the earliest on 1 June 2016.












(20)


In a decision dated 9 June 2016 (the ‘HO's June 2016 Decision’), the Hearing Officer recalled that a revised deadline of 23 June 2016 had already been set (on 27 May 2016) for the submission of a response to the SO. Since, in particular, that revised deadline had been set in response to Qualcomm's requests, the time period laid down in the cover letter of the SO had become redundant. Qualcomm's submissions on when that period started to run had been overtaken by events. To the extent that these submissions were in Qualcomm's letter of 21 March 2016, they had been dealt with by the Hearing Officer's email and letter dated 15 April and 27 May 2016 respectively. To the extent that Qualcomm raised them again and updated them on 30 May and 1 June 2016, they were irrelevant to the issue of whether the then-applicable deadline (23 June 2016) ought to be revised. On that issue, the Hearing Officer granted an additional day to permit confidential submissions on substance being made on Qualcomm's behalf from a ‘data room’ relating to a limited amount of highly confidential documents (‘Confidential Submissions’) (see (26) below) after the submission of the main body of Qualcomm's response to the SO, the deadline for which remained 23 June 2016.












(21)


By email sent on the evening of 21 June 2016, Qualcomm made a reasoned request for a further extension until Monday, 27 June 2016. The Hearing Officer accorded the requested extension by email the next day, specifying that, consistently with the HO's June 2016 Decision, a data room would be available for any Confidential Submissions (see further (26) below).












(22)


Qualcomm submitted its written response to the SO on 27 June 2016. On 28 June and again on 30 June 2016, Qualcomm's lawyers made ‘confidential substantive submissions’ in relation to certain documents whose confidential versions they had examined as part of the restricted access procedures described in (26) below.





Qualcomm's requests to the Hearing Officer for greater access-to-file following the SO









(23)


On 30 March 2016, following a request in Qualcomm's letter of 21 March 2016, the Hearing Officer met with Qualcomm's external counsel. During this meeting, it was indicated that Qualcomm was finalising a request for further access to certain documents obtained by the Commission from Apple in particular.












(24)


The April 2016 Request (see (15) above) included voluminous reasoning contained in two annexes: the first concerning certain Apple and Intel Corporation documents, the second concerning responses by 13 other undertakings to requests for information sent by the Commission. Given Qualcomm's priorities as conveyed in the meeting of 30 March 2016, the Hearing Officer dealt as a matter of priority with Qualcomm's requests for greater access to the Apple documents identified in the first annex.












(25)


In May 2016, at the Hearing Officer's behest, DG Competition provided Qualcomm with four separate batches of revised accessible versions of (excerpts of) certain documents covered by the April 2016 Request. These revised versions had been drawn up following contacts between the Hearing Officer and the 15 information providers concerned (6).












(26)


In relation to certain other documents emanating from two of these providers, the Hearing Officer arranged for restricted access by means of separate ‘data room procedures’ (7). These involved access for specific external advisers of Qualcomm, on DG Competition's premises, to relevant confidential versions on (i) 23 and 24 May 2016 and (ii) 1 June 2016 respectively (8). The relevant data room rules made provision for possible Confidential Submissions. In addition, in relation to another document emanating from a different information provider, the Hearing Officer arranged in May 2016 for restricted access by means of a ‘confidentiality ring’ arrangement (9) between that provider and specified external advisers of Qualcomm.












(27)


In a letter to Qualcomm dated 27 May 2016 concerning the deadline to respond in writing to the SO (see (17) above), the Hearing Officer described how Qualcomm (or specified external advisers nominated by Qualcomm) had thus received or would soon receive – to the extent warranted by the effective exercise of Qualcomm's rights of defence – the bulk of the information (including confidential information) to which Qualcomm sought greater access. That letter, whose main purpose was to set a revised deadline for a written response to the SO, explained that Qualcomm would receive in due course a reasoned response to the April 2016 Request. It also explained that, rather than impede the preparation of Qualcomm's response to the SO by waiting until all additional information to which the Hearing Officer considered Qualcomm was entitled was assembled and a formal decision under Article 7(1) of Decision 2011/695/EU could be adopted, the Hearing Officer had arranged for DG Competition to provide Qualcomm with revised non-confidential versions on a rolling basis in advance of a formal decision, albeit in four instalments at predictable intervals to avoid an unduly piecemeal approach.












(28)


By letter dated 30 May 2016, Qualcomm took issue with, among other things, the extent of the further access to certain documents that Qualcomm had been granted, including the extent of the redactions that DG Competition had applied to the ‘non-confidential data room report’ that had been prepared for Qualcomm's attention as part of the first data room procedure mentioned in (26) above. Qualcomm also requested, for the first time before the Hearing Officer and without supporting argument, full and unrestricted access to three additional documents.












(29)


The HO's June 2016 Decision (see (20) above) includes, in accordance with Article 7(3) of Decision 2011/695/EU, a reasoned response to the April 2016 Request. Among other things, that decision describes the approach taken to Qualcomm's requests for further access-to-file. In essence, where, after hearing the various information providers concerned, given information proved to be genuinely confidential under a three-pronged test based on the judgment in Bank Austria v Commission (10), an appropriate and proportionate balance had to be struck between legitimate confidentiality interests and the proper exercise of Qualcomm's rights of defence. Where the information concerned appeared potentially to be of specific relevance or use to Qualcomm in terms of understanding the context of statements in the SO or of conceivable defence arguments, but was of particular sensitivity to the information provider concerned and difficult – impossible even – to redact for Qualcomm's attention in a non-confidential yet sufficiently instructive way, striking that balance meant arranging the restricted access procedures mentioned in (26) above.












(30)


The HO's June 2016 Decision also, among other things, rejects Qualcomm's access-to-file complaints and requests made in the letter dated 30 May 2016. For instance, it rejects the request by Qualcomm's external advisers to be allowed a second visit to a data room to make submissions on the confidentiality of some of the materials covered by the first data room procedure. In the context of reviewing challenged redactions to the draft data room report prepared in that procedure (11), the Hearing Officer had already been able to glean and consider the thrust of the submissions that were probably envisaged. Further, rather than seeking – even in broad terms – access to further information, Qualcomm had merely sought the opportunity to make such a request at a later date.





(Interested) third persons









(31)


On their reasoned applications in late 2015, Apple and NVIDIA Corporation were, in accordance with Article 5 of Decision 2011/695/EU, admitted to proceedings as interested third persons. NVIDIA's related request to be heard as an interested third person ‘with access to the file and rights to be heard equivalent to that of a complainant’ (12), was not granted insofar as it sought rights going beyond those of interested third persons.












(32)


In early 2016, in response to Qualcomm's expression of opposition to the admission of NVIDIA as an interested third person, the Hearing Officer explained that the fact that an applicant for interested third person status is claiming damages based on Article 102 TFEU before national courts does not weigh against its admission as an interested third person in Commission proceedings (13).












(33)


In May 2016, an application from a different third person did not make out a ‘sufficient interest’ for the purposes of Article 27(3) of Regulation No 1/2003, Article 13(1) of Regulation No 773/2004 and Article 5 of Decision 2011/695/EU. In the absence of a response to the Hearing Officer's provisional negative assessment under Article 5(3) of Decision 2011/695/EU, this application to be heard as an interested third person was deemed rejected.












(34)


On 15 March and on 31 March 2016 respectively, DG Competition provided Apple and NVIDIA with a non-confidential version of the SO to inform them, pursuant to Article 13(1) of Regulation No 773/2004, of the nature and subject matter of the proceedings. Apple and NVIDIA made known their views in writing under Article 13(2) of that regulation on 2 May and 31 May 2016 respectively.












(35)


In late 2016, DG Competition sought and received written comments from Apple on a non-confidential version of Qualcomm's response to the SO (14).












(36)


Also in late 2016, DG Competition refused NVIDIA's request for access and the opportunity to respond in writing to: (i) a non-confidential version of Qualcomm's response to the SO; and (ii) any observations of Qualcomm on NVIDIA's comments made under Article 13(2) of Regulation No 773/2004.












(37)


In response to NVIDIA's objections to this refusal, the Hearing Officer explained, in substance, that while DG Competition may provide interested third persons with such documents (15), it enjoys considerable leeway as regards whether to accede to requests such as NVIDIA's. Decision 2011/695/EU does not foresee interested third persons obtaining a decision of the Hearing Officer granting them access to documents going beyond written information on ‘the nature and subject matter of the procedure’ to which they are entitled under Article 13(1) of Regulation No 773/2004. NVIDIA's right to be informed under that Article 13(1) had already been satisfied. Differential treatment of interested third persons is permissible where there are objective differences between them, for instance with respect to the contribution they can make to the Commission's understanding of relevant factual issues.





No oral hearing









(38)


With a view to assisting Qualcomm's planning, the Hearing Officer's letter of 27 May 2016 (see (17) and (27) above) indicated that, if Qualcomm were to request, in accordance with Article 12(1) of Regulation No 773/2004, the opportunity to develop its arguments in response to the SO at an oral hearing, the Hearing Officer envisaged organising such a hearing on one of two adjacent dates in mid-July 2016. In an email accompanying the HO's June 2016 Decision, the envisaged date for a possible oral hearing was amended to another date in mid-July 2016.












(39)


In an email dated 21 June 2016, Qualcomm indicated that, in view of the time needed to prepare for an oral hearing concerning the SO and of the prospect of having soon to finalise its written response to a different statement of objections (in Case AT.39711 Qualcomm (predation)), Qualcomm had ‘decided – with regret – to decline the oral hearing in the present case’.












(40)


When according the additional extension, sought in that email, of the period for submitting Qualcomm's written response to the SO (see (21) above), the Hearing Officer emphasised that Qualcomm was not faced, as it appeared to suggest, with a choice between an oral hearing on the then-envisaged date in July 2016 or no hearing at all. If Qualcomm were to request an oral hearing in that response, it would be open to it to make submissions on whether the envisaged date was appropriate. While that date had been proposed in light of, among other things, the fact that Qualcomm was dealing with a statement of objections in another case, careful consideration would be given to any request for another hearing date.












(41)


In its written response to the SO, Qualcomm did not request an oral hearing.





Letter of facts – response deadline and access-to-file









(42)


On 10 February 2017, DG Competition issued a ‘letter of facts’ (the ‘LoF’) informing Qualcomm about: (i) evidence to which Qualcomm already had access but which was not expressly relied on in the SO and which, on further analysis of the file, could be relevant to support the conclusion provisionally reached in the SO, and (ii) additional evidence obtained after adoption of the SO.





Deadline for responding to the LoF









(43)


The LoF gave Qualcomm until 3 March 2017 to provide any comments on this evidence. On 24 February 2017, Qualcomm sought an additional two months for doing so. By letter dated 27 February 2017, DG Competition revised the deadline for commenting on the LoF to 13 March 2017.












(44)


On 1 March 2017, Qualcomm asked the Hearing Officer ‘to determine that a two-month extension of the deadline within which to respond to the LoF [was] appropriate’. Qualcomm based its request on the content of the LoF, an alleged lack of urgency, and on what Qualcomm described as several ‘procedural infirmities’ (such as an alleged lack of ‘proper notice’ being given to Qualcomm before the issuance of the LoF and of ‘equality of arms’ between Qualcomm and what Qualcomm described as ‘the de facto complainant’, Apple).












(45)


By decision dated 8 March 2017, bearing in mind, by analogy, the matters set out in Article 9(1) of Decision 2011/695/EU (16), the Hearing Officer rejected Qualcomm's requested time extension. In essence, Qualcomm's submissions, taken individually or in combination, were unconvincing. For instance, there is no specific requirement under EU law for notice to be given in advance of a letter of facts and, in any event, Qualcomm had in effect acknowledged that it had received two days' prior notice of the LoF. Also, Qualcomm's claims of a lack of equality of arms with Apple missed the point that Case AT.40220 was not an adversarial dispute pitting Apple against Qualcomm (17). A comparison of the time afforded to Apple and Qualcomm respectively for making distinct submissions of a materially different nature was not therefore relevant to whether Qualcomm should have been given further additional time in which to respond to the LoF. Given that Qualcomm's other submissions were not convincing, any extension of the period for Qualcomm's response to the LoF on the sole ground of an alleged lack of urgency in Case AT.40220 would have risked introducing undue delay.





Access-to-file after the LoF









(46)


As part of the additional access-to-file arranged by DG Competition in connection with the LoF, Qualcomm's lawyers initially agreed to a data room procedure for certain material provided by third parties in response to requests for information sent by the Commission. Having viewed this material on the morning of 17 February 2017, Qualcomm's lawyers requested that Qualcomm have direct access to copies of this material. DG Competition refused this request on the same day.












(47)


By letter to the Hearing Officer dated 27 February 2017, Qualcomm sought full and unrestricted access to the material disclosed in the data room.












(48)


On 1 March 2017, Qualcomm wrote to DG Competition. Criticising the accessible versions of certain documents made available following the LoF, Qualcomm sought further access to certain documents; some mentioned in the LoF, others not.












(49)


By letter dated 3 March 2017, DG Competition disputed Qualcomm's criticisms of 1 March 2017 and rejected Qualcomm's requests for further access-to-file of that date almost in their entirety.












(50)


By decision dated 10 March 2017, the Hearing Officer rejected Qualcomm's request of 27 February 2017. Contrary to the submissions made on Qualcomm's behalf, the data room material was confidential. A combination of a data room procedure and the provision to Qualcomm of the non-confidential versions of the material concerned struck an appropriate balance between the effective exercise of Qualcomm's rights and the legitimate interests of the providers of that material.












(51)


On 13 March 2017, Qualcomm submitted its written comments on the LoF.












(52)


On 15 March 2017, DG Competition offered Qualcomm, ‘as a matter of courtesy’, an additional opportunity to have certain of Qualcomm's advisers review in a data room the material previously made available on 17 February 2017. This was because the advisers concerned had, on 17 February 2017, spent in the data room only a relatively small portion of the time allotted for that purpose.












(53)


Qualcomm responded on 17 March 2017, seeking data-room access not only to the material that was in the data room of 17 February 2017, ‘but also to all other equivalent submissions (spreadsheets) made by all third parties’.












(54)


On 20 March 2017, DG Competition refused such access to materials other than those available in the data room of 17 February 2017. Later on 20 March 2017, Qualcomm wrote to the Hearing Officer seeking further access to documents obtained by the Commission from several third parties. In an email to DG Competition dated 21 March 2017, Qualcomm explained that it would not take up the offer of additional data-room access, but that it had instead asked the Hearing Officer, on 20 March 2017, to grant further access-to-file.












(55)


In a decision dated 11 April 2017, the Hearing Officer granted access to less-redacted versions of certain documents obtained from three information providers and rejected the remainder of Qualcomm's request of 20 March 2017.












(56)


On 29 May 2017, Qualcomm made further written submissions to DG Competition on the evidence added to the case file since the adoption of the SO.





Procedural issues raised by Qualcomm


Qualcomm's procedural criticisms









(57)


According to Qualcomm, the investigation in the present case has been ‘beset by procedural irregularities’. Qualcomm's complaints mainly concern intertwined issues of access-to-file and deadlines for responding to the SO or the LoF.












(58)


In its response to the SO, Qualcomm claims that it was not granted access-to-file on 21 December 2015, such that it was ultimately required to prepare its response to the SO ‘in less than three weeks’. In this regard, Qualcomm, claims in essence that: (i) ‘material exculpatory evidence’ was not provided by DG Competition until ‘almost two months into the original three-month period in which to respond to the SO’; (ii) confidentiality redactions applied to the documents on the Commission's file were ‘excessive and unwarranted’, requiring Qualcomm to spend excessive time and resources seeking further access-to-file; and (iii) the ‘earliest date upon which access to file can be considered to be granted is 1 June 2016’.












(59)


Qualcomm specifies in that response that it maintains ‘all the concerns and objections it raised with the Hearing Officer by letter of 30 May 2016’. That letter took issue with, in particular: (i) the extent of further access granted by means of the first data room procedure mentioned in (26) above (18); and (ii) the incremental manner in which further access-to-file was accorded in response to various requests from Qualcomm.












(60)


Qualcomm adds that the ‘Commission's commitment to administrative efficiency must not be at the expense of Qualcomm's rights of defence’, arguing that the procedure in Case AT.40220 has been ‘unnecessarily rushed’ and that to ‘expect Qualcomm to prepare its defence within just three weeks of being able to substantially assess the evidence is to deny it equality of arms vis-à-vis the Commission and its rights of defence’.












(61)


In its responses to the SO and the LoF, Qualcomm also criticises DG Competition for having failed to obtain from Apple ‘evidence critical to the assessment [required before the adoption of the SO]’ by means of a broader request for information.












(62)


In its response to the LoF, Qualcomm maintains that both the initial deadline of 3 March 2017 and the revised deadline of 13 March 2017 for that response ‘were manifestly unreasonable and disproportionate’, particularly in the light of what Qualcomm portrays as the distraction of ‘persistent access-to-file issues’ and a lack of ‘equality of arms’, both between Qualcomm and the Commission and between Qualcomm and Apple.












(63)


Qualcomm also argues in response to the LoF that the duration of an alleged infringement cannot be extended by a letter of facts into a period that postdates the adoption of the corresponding statement of objections.












(64)


At various points in the procedure – typically in the context of seeking revised deadlines for the submission of it responses to the SO or the LoF but also when passing up the opportunity to develop its arguments at an oral hearing (see (39) to (41) above) – Qualcomm complained or suggested that it was detrimental to its rights of defence for it and its advisers to have to defend Qualcomm in two separate and ongoing cases before the Commission.





Views of the Hearing Officer









(65)


It is true that there were shortcomings in the set of documents made available to Qualcomm on 21 December 2015 for the purposes of access-to-file. In particular, that set did not clearly reflect the fact that certain information providers had claimed confidential treatment for the entirety of around 100 documents, non-confidential versions of which were not made available by DG Competition until 19 February 2016 (see (8) and (9) above). In addition, as noted in the HO's June 2016 Decision, in numerous instances, redactions had been made to information that was not confidential towards Qualcomm and, in relation to certain information that was indeed confidential, redactions had often been applied in a manner that did not strike an appropriate balance between such confidentiality and the proper exercise of Qualcomm's right to be heard. There were also some clerical errors or infelicities in relation to document referencing that required subsequent clarification by DG Competition.












(66)


However, these shortcomings have been adequately addressed in the further course of proceedings. In particular: (i) Qualcomm subsequently received further access (either directly or by means of specific external advisers acting on its behalf) to the additional information (19) required for the proper exercise of the right to be heard; and (ii) coupled with this further access, Qualcomm was afforded additional time, to the extent warranted by the effective exercise of its procedural rights, in which to respond in writing to the SO.












(67)


Against this backdrop, Qualcomm's complaints summarised in (58) and (59) above are overstated. It appears that Qualcomm, in an effort to support its claim that it had a mere three weeks to prepare its response to the SO, is at pains to denigrate the level and quality of the (further) access that it received to the Commission's investigation file following issuance of the SO, emphasising in particular the time and resources it devoted to checking and challenging the appropriateness or implementation of many of the measures taken to protect confidential information, even when these were required or upheld by decisions of the Hearing Officer.












(68)


However, in relation to confidential information, Qualcomm's interest in responding as it saw fit to the objections in the SO was not, as Qualcomm has sometimes appeared to suggest, the only legitimate interest that had to be considered and protected where appropriate. The mere fact that a party might argue that it needs precise, entirely-unredacted commercial information to flesh out in great detail a particular argument is not automatically such as to entitle that party to that information even to the extent that it is confidential. Rather, as can be seen from (29) above, where information is recognised as confidential, there is a need to strike an appropriate balance between the proper exercise of the rights of defence of an addressee of a statement of objections and the right of information providers to protect their business secrets and other confidential information.












(69)


Given the level of information made available in the course of further access-to-file, Qualcomm was able to run its arguments with adequate precision without the competing and legitimate confidentiality interests of third party information providers having to be overridden. Since access-to-file is not an end in itself, but merely a corollary of the rights of the defence that access-to-file is intended to protect (20), to the extent that confidential information is concerned, where Qualcomm was in a position to make the arguments that it saw fit, the fact that it might have had to make such arguments without every last confidential detail being disclosed to it is not, on its own, contrary to the rights of the defence.












(70)


Whether or not access-to-file was granted in December 2015 is immaterial to the appropriateness of the final deadline set for that response. Certainly, it might have been preferable had better access been made available from the outset to the Commission's investigation file (and in particular to the documents for which no non-confidential versions were apparent in the set provided on 21 December 2015). However, the mere fact that the accessible file might not have been made available in full on 21 December 2015 does not have the automatic consequence that the time period for responding to the SO had not started running on that date (21). It is inherent in the provisions and texts relating to access-to-file (22) that, if requests for further access-to-file are well-founded, additional materials may be made available after the provision of the initial body of access-to-file material. Grant of the full extent of the extensions sought by Qualcomm – perhaps by delaying the setting of a revised deadline for the response to the SO until all additional information to which, on consideration of Qualcomm's reasoned requests, Qualcomm was entitled had been identified, drawn up, cleared for disclosure, collated and sent – would have inappropriately impinged on the proper progress of the overall administrative procedure in Case AT.40220. In any event, as can be seen from (12), (16), (17) and (20) above, contrary to what Qualcomm claims, the question of when precisely the initial three-month period set out in the letter accompanying the SO started to run does not, in the circumstances of the case, have ‘material implications’ for the (appropriateness of the) deadline for the submission of Qualcomm's response to the SO.












(71)


The premise of Qualcomm's criticisms described in (60) above, namely that Qualcomm had a mere three weeks to prepare its response to the SO, is unconvincing. The set of documents provided on 21 December 2015 included all the documents to which the SO refers and there were over six months between the issuance of the SO and the ultimate deadline for responding to it. Qualcomm's suggestion that the present case has been ‘unnecessarily rushed’ is accordingly undermined. In any event, these criticisms appear to overlook the importance, given the role entrusted to the Commission by Article 105 TFEU of ensuring the application of Article 102 TFEU and the ‘reasonable time’ requirement in Article 41(1) of the Charter of Fundamental Rights of the European Union, of the proper conduct and progress of administrative proceedings (23). Providing additional material on a rolling basis while avoiding an unduly piecemeal approach, as has been done in the present case, served the dual purpose, reflected in Article 9(1) of Decision 2011/695/EU, of facilitating the effective exercise of the right to be heard while avoiding undue delay in proceedings. Qualcomm's suggestion that there is a lack of urgency in the present case is also unconvincing. Among other things, it overlooks the fact that, as of the adoption of the SO, the provisions at issue were still in force, as well as the importance of the Commission being able to act in a reasonable time to combat suspected infringements of Article 102 TFEU, not least in respect of sectors characterised by (potentially) fast-evolving technology.












(72)


Concerning the criticism noted in (61) above, it suffices for the purposes of the present report to note that since it is for the Commission to decide how it conducts the investigation of a case, it cannot in principle be required to carry out further investigations where it considers that the preliminary investigation of the case has been sufficient (24). Whether in the circumstances of the present case the Commission ought to have made a broad request for information of the kind that Qualcomm appears to envisage is a matter more of substance and policy than of due process.












(73)


In support of its allegation noted in (62) above, Qualcomm recycles the arguments rejected as unconvincing by the Hearing Officer's decision of 8 March 2017, overstates the significance of minor referencing issues, and emphasises the time that it spent identifying ‘in the greatest possible detail individual instances of’ what it describes as ‘inadequate access to material’. The elements raised by Qualcomm in this context do not demonstrate that the deadline of 13 March 2017 was disproportionately tight. That DG Competition subsequently allowed an opportunity to revisit a data room and, ultimately, the submission of a further set of written observations from Qualcomm after the response to the LoF is not such as to undermine this assessment. As emerges from (52) to (56) above, this stemmed from a courtesy afforded to Qualcomm by DG Competition because certain of Qualcomm's external advisers had chosen to challenge the appropriateness of a data room procedure for certain material rather than utilise the full amount of time foreseen for their access to confidential versions of that material on Qualcomm's behalf.












(74)


As for Qualcomm's contention summarised in (63) above, it overlooks the fact that the SO specified the duration of the suspected infringement concerned ‘to date’ (that is, as of the date of adoption of the SO) and, with respect to the ‘end date’, specifically stated that that infringement was ‘still ongoing’. In such circumstances, it follows from the judgment in France Télécom v Commission (25) that the LoF did not impermissibly extend the duration of Qualcomm's suspected infringement as put to Qualcomm in the SO.












(75)


Contrary to what Qualcomm has sought to suggest, the Commission has taken account of the implications of Qualcomm being the addressee of a statement of objections in two separate ongoing cases. This is evident, for example, from (5) and (40) above, from the fact that the deadlines for Qualcomm's written responses to the two statements of objections concerned were staggered to avoid the burden for Qualcomm of having to submit two responses on the same date, and from the fact that the initial deadline granted by DG Competition for responding to the LoF took into account the fact that Qualcomm was then also dealing with a request for information in Case AT.39711. Qualcomm has not demonstrated that the effective exercise of its procedural rights in the present case has been prevented by its involvement in Case AT.39711.





Concluding remarks









(76)


The draft decision reflects the fact that, in the light of Qualcomm's submissions, the objection in the SO concerning a suspected abuse of a dominant position related to baseband chipsets compliant with the UMTS standard together with the older GSM standard has been dropped.












(77)


In accordance with Articles 16 and 17 of Decision 2011/695/EU, I have examined whether the draft decision deals only with objections in respect of which Qualcomm has been afforded the opportunity of making known its views. I conclude that it does.












(78)


Overall, I consider that the effective exercise of procedural rights has been respected in this case.





Brussels, 23 January 2018.

Joos STRAGIER




(1)  Pursuant to Article 16 of Decision 2011/695/EU of the President of the European Commission of 13 October 2011 on the function and terms of reference of the hearing officer in certain competition proceedings, OJ L 275, 20.10.2011, p. 29 (‘Decision 2011/695/EU’).

(2)  Council Regulation (EC) No 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty, OJ L 1 4.1.2003, p. 1 (‘Regulation No 1/2003’).

(3)  Commission Regulation (EC) No 773/2004 of 7 April 2004 relating to the conduct of proceedings by the Commission pursuant to Articles 81 and 82 of the EC Treaty (OJ L 123, 27.4.2004, p. 18) as amended by Commission Regulation (EU) 2015/1348 of 3 August 2015 (OJ L 208, 5.8.2015, p. 3) (‘Regulation No 773/2004’).

(4)  It is DG Competition's practice that, when a submission of documents to the Commission exceeds 25 documents, these documents are not registered in the Commission's electronic file as separate ‘IDs’ (documents) but instead as separate items in a ‘collection’ that bears a single overarching ‘ID number’ reference.

(5)  See (25), (26) and (29) below.

(6)  The Hearing Officer also confirmed to Qualcomm that Qualcomm already had, by the time of the April 2016 Request, the full versions of certain documents.

(7)  In the context of access-to-file, a data room procedure is a form of restricted disclosure by which material is disclosed to a limited number of specified advisers for a limited period of time in a secure room on the Commission's premises, subject to a number of restrictions and safeguards to prevent confidential information being disclosed beyond this ‘data room’.

(8)  In the context of the first data room procedure, those of Qualcomm's external advisers that were involved objected to certain redactions required by DG Competition in the draft data room report prepared by them for Qualcomm's attention. On reviewing the materials concerned, the Hearing Officer arranged for a less-redacted report to be released to Qualcomm.

(9)  In the context of access-to-file, a ‘confidentiality ring’ is a form of restricted disclosure by which a party entitled to access-to-file agrees, with an information provider seeking confidential treatment of certain information obtained from it by the Commission, that that information be received on that party's behalf by a restricted circle of persons (decided by negotiation on a case-by-case basis). See further point 96 of the Commission notice on best practices for the conduct of proceedings concerning Articles 101 and 102 TFEU (OJ C 308, 20.10.2011, p. 6) (the ‘Antitrust Best Practices Notice’).

(10)  T-198/03, EU:T:2006:136, paragraph 71. This test involved assessing, in the context of access-to-file by Qualcomm: (i) whether the information at issue was known only to a limited number of persons; (ii) whether its disclosure was liable to cause serious harm; and (iii) whether the interests liable to be harmed by disclosure were objectively worthy of protection.

(11)  See footnote 8.

(12)  NVIDIA is a complainant in separate proceedings in Case AT.39711 Qualcomm (predation).

(13)  In view of the concerns expressed by Qualcomm, the Hearing Officer added that: (i) in accordance with Article 16a(3)(b) of Regulation No 773/2004, ‘information that the Commission has drawn up and sent to the parties in the course of its proceedings’ cannot be used in proceedings before national courts until the Commission has terminated its proceedings; and (ii) the acceptance of NVIDIA as an interested third person did not prevent Qualcomm from exercising its rights of defence in the Commission's proceedings.

(14)  See (45) below regarding Qualcomm's complaint of a lack of ‘equality of arms’ between it and Apple concerning time limits.

(15)  See, for example, judgment in Österreichische Postsparkasse and Bank für Arbeit und Wirtschaft v Commission (T-213/01 and T-214/01, EU:T:2006:151, paragraph 107), and point 103 of the Antitrust Best Practices Notice.

(16)  Article 9(1) of Decision 2011/695/EU relates to written responses to statements of objections.

(17)  See, by analogy, judgment in SEP v Commission (T-115/99, EU:T:2001:54, paragraph 43).

(18)  See (28) above.

(19)  Including referencing and other clarifications, as well as more instructive summaries or non-confidential versions of wholly or partly confidential documents.

(20)  See, to this effect, judgments in Aalborg Portland and Others v Commission (C-204/00 P, EU:C:2004:6, paragraph 68); Atlantic Container Line and Others v Commission (T-191/98 and T-212/98 to T-214/98, EU:T:2003:245, paragraphs 376 and 377); as well as Solvay v Commission (T-186/06, EU:T:2011:276, paragraph 214).

(21)  See, by analogy, judgment in Mannesmannröhren-Werke v Commission (T-44/00, EU:T:2004:218, paragraph 65).

(22)  In particular, Article 7(1) of Decision 2011/695/EU and point 47 of the Commission Notice on the rules for access to the Commission file in cases pursuant to Articles 81 and 82 of the EC Treaty, Articles 53, 54 and 57 of the EEA Agreement and Council Regulation (EC) No 139/2004 (OJ C 325, 22.12.2005, p. 7 with amendments of 2015 set out in OJ C 256, 5.8.2015, p. 3).

(23)  See also, by analogy, judgment in SKW Stahl-Metallurgie Holding AG and SKW Stahl-Metallurgie GmbH v Commission (T-384/09, EU:T:2014:27, paragraph 61).

(24)  See by analogy, among others, judgments in Eisen und Metall v Commission (9/83, EU:C:1984:86, paragraph 32); Thyssen Stahl v Commission (T-141/94, EU:T:1999:48, paragraph 110); and FMC Foret v Commission (T-191/06, EU:T:2011:277, paragraph 137).

(25)  T-340/03, EU:T:2007:22, paragraphs 49 to 52.