China talks to Korea to build Qualcomm antitrust case

China talks to Korea to build Qualcomm antitrust case

22 AUG 2014

China’s authorities have reportedly had discussions with their counterparts in South Korea to share notes on the mainland’s antitrust case against US chipmaker Qualcomm for alleged monopolistic practices.

Reuters reported yesterday that the country’s two antitrust regulators met in May and June to discuss Korea’s experience in handling similar cases.

Back in 2009, Korea’s Fair Trade Commission (KFTC) charged the chipmaker with setting unreasonable and discriminatory terms for licensing its patents and fined the company $200 million.

China’s probe against Qualcomm could result in record fines of more than $1 billion and force the company to modify its licensing contracts with partners.

China accounts for almost half of Qualcomm’s total revenue, which was $25 billion in its last fiscal year.

The San Diego-based firm has been under investigation by China’s National Development and Reform Commission (NDRC), one of three antitrust regulators, since November over its patent licensing and pricing practices. The NDRC announced in February the company was suspected of abusing its dominant position in the wireless chipset sector .

Chinese officials have indicated off the record that the real issue behind the probe is that Qualcomm’s royalties on intellectual properties are comparatively higher in China than other countries. Some Chinese customers have complained that the company uses its dominant position to charge high patent fees for its chipsets, although industry experts believe the NDRC is attempting to drive down domestic costs to support the rollout of 4G networks.

Qualcomm and more than 30 other foreign tech companies have come under scrutiny by China’s antirust authorities, which have stepped up their efforts since early 2013. The probes are not limited to tech firms — Chinese authorities are also investigating Audi, Chrysler, GM, Honda, Mercedes-Benz, Nissan and Toyota on suspicion of violating the anti-monopoly law.

And the NDRC recently fined Japanese auto parts makers $200 million for price manipulation.

Insiders attribute the increase in cases to the growing maturity of the regulators, which have gained experience since the Chinese anti-monopoly law was passed in 2008.

But others point to increasing concerns of a rise in protectionism since the country’s new president, Xi Jinping, came into power in early 2013, pushing a policy that emphasises developing the country’s domestic IT and auto firms at the expense of foreign ones.

Author

Joseph Waring

Joseph Waring joins Mobile World Live as the Asia editor for its new Asia channel. Before joining the GSMA, Joseph was group editor for Telecom Asia for more than ten years. In addition to writing features, news and blogs, he...

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