Trump Administration at Odds With FTC in Antitrust Case

last year on the chip maker. Of course, Qualcom is appealing both rulings, just as it's appealing a decision by a federal judge in San Francisco which would force the chip maker to change its practices. In an unusual twist, the Justice Department is now arguing against the Federal Trade Commission, which brought the case, So joining me to help us

sort this all out. As Spencer Waller, professor of anti trust law at the Loyola University School of Law, so, Federal Judge Lucy co issued a sweeping, two three page opinion that Qualcom had strangled competition for years. What remedy did she order? So this case relates to the way they license and sell their chips for what we would

call three G and four G smartphones. And so the judge found that Qualcom monopolized and attempted to monopolize various aspects of the chip market in terms of the way it licenses technology, the way it refused to sell chips or license to rival chip makers, and the way it provided certain discounts to clients to sort of lockout competition. What's controversial about her remedy is she found that this

was all illegal. She enjoyed the specific business behavior that was illegal, but because it related to the old technology three G and four G, she extended her injunction to the ongoing sales and licensing of the five G technology. So Qualcom basically passed to the license technology to rival chip makers. It has to live up to its promises to license all comers on fair, reasonable and nondiscriminatory terms, and it has to avoid certain exclusive dealing arrangements and

certain sweetheart deals. So the Trump administration interfered even before the judge's decision, asking her to consider limiting any penalties. Now it's interfering again at the appellate stage. How unusual is that it's not unprecedented, but it's highly unusual the

two agencies. This case was brought by the FTC that as an independent agency with five commissioners appointed by the President confirmed by the Senate, and the two agencies operate independently, although they generally go out of their way to not interfere with each other and generally not duplicate each other's efforts. This is a rare, not completely unprecedented. This is the most aggressive I've ever seen the d o J jumping

into an FTC case. Judge co refused to put her ruling on hold while Qualcom appeals, so the chip makers asking the Ninth Circuit to do that, and the Justice Department is backing Qualcom, saying the case threatens national security.

How So, the Justice Department's position is that essentially Qualcom is the most important maker of five G modem chips and the related technology, and it's vital for national security and energy policy, and the remedies should be limited so as not to interfere with their innovation and the rollout of five G secure technology. Is that an unusual position to take? I know that last year the Trump administration blocked a hostile takeover bid from rival chip maker Broadcom.

Is it unusual to be so protective of a company like this. Well, there's two separate things. There's the antitrust review, which is generally limited to what is the likely harm to competition and for certain deals, there's a separate review for national security and qual acquisition was blocked on national security grounds. This is the first time I can think of that the Justice Department has ever gone into court to argue that an otherwise antitrust violation should be remedied

in limited ways because it also threatens national security. The Antitrust Division has really always taken the decision that all they do is antitrust. All they do is analyze effects on competition, and this is a very different and important and troubling step for them to jump in in this

particular way. It's also very troubling because right now the technical issue is just whether the District cart judges order should be stayed, But in doing so, the Justice Departments partially arguing that the STC is not likely to prevail on appeal. So they're really signaling to the court that one agency believes that the case is no good and the other agency just one the case below. How is her order as far as you're concerned, do you think

it will be subject to reversal by the Nine Circuit? Oh, it's a long and complicated opinion. Much of it turns on on the facts, and you know the credibility of witnesses. All I can say is it's hard for me to predict what the Ninth Circuit says. I think if this case gets in front of the Supreme Court, the FTC will have some uphill slating. Supreme Court has been very narrow in its views of Section two of the Sherman Act about what is and is not monopolization. You mentioned

what's going on in the EU. Their law is more expansive, it covers more things, They have better theories, and they have different remedies, including fines, and so the EU stuff is on pretty firm ground, and at least the U S stuff is subject to debate. Although I find the FTC case credible and based on existing law, including when you pledge to a trade association or a standard setting body that you're gonna license things in a certain way.

If they adopt your technology, you're to stick with that. I want to ask you about the FTCs argument in their argument opposing Qualcoms intervention. Here it says that the argument that an anti trust remedy that reduces Qualcoms profits constitutes an impermissible threat to national security would imply that Qualcom is immune from antitrust scrutiny. Do you agree with that? Does it go that far? Well, I mean, you know, the agencies are starting to throw some sharp alpos at

each other. I agree with the stec's position on this. This has come up many other times. For example, when a T and T was being broken up, the antitrust concerns prevailed over certain parts of the government who thought that this would be bad for national security. This is an antitrust case. There are other ways to pursue the national security concerns. Well. Anti trust is becoming very much a part of the conversation today, and certainly Qualcom is

keeping a lot of anti trust lawyers in business. Thanks so much for joining us. That Spencer while or he's a professor of antitrust law at the Loyola University School of Law. Thanks for listening to the Bloomberg Law Podcast. You can subscribe and listen to the show on Apple Podcasts, SoundCloud, and on Bloomberg dot Com. Slash podcast. I'm June Rosso. This is Bloomberg m