The European Commission is delaying its investigation into Chinese telecom vendors Huawei and ZTE, according to Reuters sources, due to the fact that no formal complaint has been recieved from a stakeholder.
The news comes in the same week that the US authorities expressed concerns about the companies' potential links to the Chinese state and related security risks.
The EC investigation concerns subsidies that Huawei and ZTE are alleged to have received from the Chinese state to enable it to undercut the prices of rivals in Europe.
The investigation was initiated by the European authorities themselves, rather than following an accusation of malpractice by a rival company.
It has been suggested that the case “unnerved” executives from vendors such as Ericsson, Alcatel-Lucent and Nokia Siemens Networks, all of which have significant businesses in China which could suffer if the Chinese authorities act in retribution.
The move to delay the case should therefore ease tensions between the European Union and China, its second largest trading partner.
A draft report by the US House of Representatives’ Intelligence Committee this week recommended that Huawei and ZTE be banned from operating in the US due to their inability to allay concerns about their links to the Chinese state and the potential security risks this could present.
Reuters also reports that Huawei is facing exclusion from a deal to provide technology for a Canadian government communications network, due to the security concerns raised in the US.
A spokesman for Canada’s Prime Minister Stephen Harper told a news conference that the government had invoked a national security exception, meaning it avoids violating international trade obligations.
Both Chinese vendors responded to the recommendations with Huawei saying the 11 month investigation by the US authorities “failed to provide clear information or evidence to substantiate the legitimacy of the Committee's concerns”.
A statement from ZTE’s director of global affairs for ZTE David Dai Shu, added that the committee’s conclusions that the company may not be ‘free of state influence’ could apply to any company operating in China.