Qualcomm (QCOM.O) has agreed to pay $75 million to settle a lawsuit in which shareholders accused the chipmaker of defrauding them by concealing its anticompetitive sales and licensing practices.
The preliminary all-cash settlement was filed on Tuesday with the federal court in San Diego and requires approval by U.S. District Judge Jinsook Ohta, who certified the lawsuit as a class action in March 2023.
Qualcomm, along with six individual defendants, including former chief executives Paul Jacobs and Steven Mollenkopf, denied any wrongdoing in agreeing to the settlement.
The San Diego-based company did not immediately respond to a request for comment.
Shareholders alleged that Qualcomm artificially inflated its share price between February 2012 and January 2017 by falsely presenting its chip sales and technology licensing as separate businesses.
In reality, Qualcomm bundled these operations to stifle competition.
This misleading information allegedly misled investors about the true nature of Qualcomm’s business practices.
In January 2017, both the Federal Trade Commission (FTC) and Apple Inc. (AAPL.O) filed separate lawsuits against Qualcomm, accusing the company of monopolizing the market for baseband processors, which are essential chips used in cellphones.
Apple claimed that Qualcomm exploited its monopoly to overcharge for chips and imposed onerous and costly terms for technology licenses.
In response to these accusations, Qualcomm maintained that the claims were baseless. Despite this defense, Qualcomm’s share price dropped by 13% on the first full trading day following Apple’s lawsuit.
The lawsuit, titled In re Qualcomm Inc Securities Litigation, is being heard in the U.S. District Court for the Southern District of California, under case number 17-00121.
The settlement, if approved, would bring closure to the accusations that Qualcomm engaged in deceptive practices to maintain its competitive edge and inflate its stock value.
The outcome could have significant implications for how Qualcomm and similar companies conduct their sales and licensing operations in the future.