Ben DiPietro, The Wall Street Journal’s Risk & Compliance Journal, January 9, 2017

Chip maker Qualcomm Inc. takes crisis center stage this week after a regulator in South Korea said it would fine the company $853 million for alleged antitrust violations related to its patent-licensing business.

Qualcomm denounced the decision by the Korea Fair Trade Commission, calling it “inconsistent with the facts and the law” and vowing to appeal. “For decades, Qualcomm has worked hand in hand with Korean companies to foster the growth of the wireless Internet,” the company said in a statement. “Qualcomm’s technology and its business model have helped those companies grow into global leaders in the wireless industry. This decision ignores that win-win relationship.”

The experts evaluate how well the company is handling this crisis.

Davia Temin, chief executive, Temin and Co.: “Qualcomm’s press release response to the ruling of the Korea Fair Trade Commission threaded the needle very well. It is cogent, nuanced, well-stated and argued, and persuasive without being overly aggressive or over-wrought. The communication had a number of goals: to respond to the markets and investment community, to put Korea on public notice that it will appeal and begin to frame the elements of that appeal while trying to not antagonize the Korean government or the court, since Qualcomm is relying on the court’s favorable hearing of the appeal.

“Qualcomm is facing a severe threat to its business model worldwide with this ruling, and in answering it appears to be setting its defensive arguments for many countries to come. Given the importance of a nuanced response, Qualcomm could not offer up a marketing or PR-like overstatement; it needed a clear but lawyerly response, delivered by its general counsel–and that is exactly what it provided. The right person is quoted, and Don Rosenberg’s pull-out quote is effective.

“Will it win the day? Yet to tell, but the response is thoughtful, strategic and understatedly persuasive. [The company has not] answered questions from the media…but it will have to answer questions from analysts on its next earnings call, and the media will be listening in, so they will need to be consistent and additive as this story unfolds.

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