Qualcomm has denied having any direct financial links with an antitrust adviser in China fired this week from his government advisory position after reports claimed he had received payments from the chip vendor.
The National Development and Reform Commission (NDRC), an antitrust regulator, has been investigating the San Diego-based firm since November over its patent licensing and pricing practices.
Zhang Xinzhu, a researcher at the Institute of Quantitative & Technical Economics at the Chinese Academy of Social Sciences, was part of a team hired by Chicago-based consultancy Global Economics Group to co-write a report on behalf of Qualcomm for submission to the regulator.
Zhang was later dismissed from the State Council’s expert commission on competition issues for taking “huge rewards” from Qualcomm, the official Xinhua News Agency reported on Wednesday.
However, Qualcomm representative Christine Trimble told Reuters: “Qualcomm paid Global Economics its standard rates for the firm’s services and did not have any financial dealings with Zhang directly.”
Zhang’s dismissal has sparked heated debate in the country over possible conflict of interests of government advisers who also do work for private firms.
The Wall Street Journal (WSJ) reported that some experts say that despite a lack of clarity from the cabinet, Zhang should have known that the relationship with Qualcomm was a conflict of interest.
But Global Economics Group chairman David Evans told WSJ: “As far as I know, there is no conflict of interest. There is nothing that prevents him from working for private clients.”
The conflict of interest debate is certainly far from clear since the regulations guiding relationships between state advisers and private businesses is not well defined. The State Council often uses lawyers or academics to advise on antitrust and economics issues.
Mobile World Live reported last month that Chinese authorities ruled that Qualcomm has a monopoly in the country, but it was not clear whether the NDRC has concluded that the chipmaker was abusing its dominant position.
In February, China’s Communications Industry Association (CCIA) reportedly filed a complaint against the US chipmaker for abusing what it alleged is a dominant market position. The NDRC subsequently said it was looking into Qualcomm’s practices after receiving complaints that it was charging higher prices in China than elsewhere.
Qualcomm said in its latest results statement that China “presents significant challenges, as our business practices continue to be the subject of an investigation”.
The San Diego-based firm believes certain licensees in China are not fully complying with their obligations to report their sales of licensed products to Qualcomm, while unlicensed companies may delay securing deals for the duration of the NDRC investigation.