National Development and Reform Commission

Regulator acts on claims Qualcomm overcharged Chinese customers

Anti-monopoly regulator says it is probing Qualcomm for possible abuse of its dominant market position in telecommunications sector

PUBLISHED : Wednesday, 19 February, 2014, 11:31am
UPDATED : Thursday, 20 February, 2014, 4:52am

China's anti-monopoly regulator said yesterday it had launched a probe into US chipmaker Qualcomm which is suspected of overcharging customers in the latest antitrust efforts to lower costs in the telecommunications industry.

The investigation into Qualcomm began in November after the regulator received complaints accusing the San Diego-based company of abusing its dominant market position, said Xu Kunlin, head of the price supervision and anti-monopoly bureau at the National Development and Reform Commission (NDRC).

"Our investigations are based on complaints," said Xu. "Protecting intellectual property rights is important, but we strongly oppose abuses of intellectual property rights."

The complaints against Qualcomm claim it has been charging higher prices in China than in other countries, Xu said at a press conference yesterday, as the NDRC spoke publicly about the probe for the first time.

Officials conducted raids at Qualcomm's Beijing and Shanghai offices in November, said Lu Yanchun, deputy inspector with the anti-monopoly regulator. He said the investigation was at an early stage.

According to China's anti-monopoly law, fines of 1 to 10 per cent of a company's revenue for the previous fiscal year can be imposed. Qualcomm's China sales in the fiscal year ended September last year stood at US$12.3 billion. The regulator also launched a probe last June against InterDigital, a US company which develops patented technologies for mobile devices and networks, on similar allegations of overcharging and abusing its market position. Lu said the company requested a suspension in the investigation in hopes of reaching a settlement.

"The company has to make some promises on what measures it will impose to address the problems that we found during the investigation," Lu said, adding the company was very co-operative during the investigation.

Deng Zhisong, a partner with Beijing's Dacheng Law Office, said a fine imposed on InterDigital could not be ruled out at this stage, while it was hard to say the amount of a possible fine on Qualcomm. The probes would likely result in a reduction in prices such as patent licensing.

Liu Junhai, a law professor at Renmin University, said the probe into Qualcomm would help lower costs for telecommunications operators and prices of mobile devices.

"The goal for the NDRC [in launching] antitrust probes and maintaining fair competition in the market" is to benefit the Chinese consumer, he said.

Industry experts said the probes by the NDRC were aimed at lowering costs in the telecommunications industry as 4G mobile networks were set to be launched this year.