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Monday, Mar 18, 2024
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Qualcomm Settles With Feds Over Acquisition

San Diego-based Qualcomm Inc. reached a settlement with the U.S. Department of Justice on April 13, resolving “gun-jumping” allegations during one of its acquisitions.

Qualcomm’s acquisition of Bedminster, N.J.-based Flarion Technologies, Inc. was cleared by the Justice Department’s antitrust division in January of this year.

However, a dispute that arose while the acquisition was being reviewed for compliance with the Hart-Scott-Rodino Act has led to a $1.8 million settlement between both companies and the Justice Department.

Qualcomm develops Code Division Multiple Access and other advanced wireless technologies.

Flarion Technologies is a developer of Orthogonal Frequency Division Multiplex Access technology and is the inventor of Flash-OFDM technology for mobile broadband Internet protocol services.

The acquisition of Flarion expands Qualcomm’s portfolio of OFDM intellectual property and increases its staff of engineers who are knowledgeable about its technology and products.

Provisions of the acquisition agreement required Flarion to obtain Qualcomm’s consent to enter into certain types of intellectual property licenses and other agreements before the acquisition was completed. Qualcomm’s approval was also needed to make certain types of customer proposals.

Qualcomm and Flarion modified some of the provisions to eliminate or reduce the consent requirement, according to Qualcomm.

But the Justice Department claims the provisions effectively gave Qualcomm an inappropriate level of control over Flarion’s business before the acquisition was cleared through the Hart-Scott-Rodino Act.

Although Qualcomm and Flarion disagree with the Justice Department’s decision, they agreed to a $1.8 million settlement under a stipulated final judgment.

The judgment contains no finding or admission of wrongdoing by Qualcomm or Flarion, according to Qualcomm.

“With the successful integration of Flarion well under way, we decided to put this matter behind us to avoid diverting or distracting the Qualcomm-Flarion team from the important tasks of integrating the best of both companies’ technologies and refining our joint roadmap,” said Louis Lupin, senior vice president and general counsel for Qualcomm.

Under terms of the acquisition, Qualcomm paid $600 million in Qualcomm stock and cash, including the assumption of vested options and warrants at fair value, according to Flarion. Further requirements may lead to additional payments of $205 million in the form of cash and Qualcomm stock.

, Julie Gallant

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