Huawei appeals to Federal Trade Commission after government action to limit access to US market

Huawei’s troubles come at a time when Washington is ratcheting up the pressure on Beijing amid an escalating trade war

PUBLISHED : Wednesday, 29 August, 2018, 1:15pm
UPDATED : Wednesday, 29 August, 2018, 10:58pm

Huawei Technologies, the world’s largest telecoms equipment vendor and second-largest smartphone brand, has appealed to the US Federal Trade Commission (FTC) for a hearing into its restricted business opportunities, saying it has been unfairly targeted by the US government over national security concerns.

“Open competition promotes both innovation and investment,” says Huawei in a filing dated August 20 to the trade commission that was also entered into the record at the Federal Communications Commission (FCC) on Monday. “Unfortunately, competition in the US telecommunications market has not been fully open for a long time. Instead, Huawei and certain other foreign entities have faced, and continue to face, regulatory intervention that has inhibited their ability to compete on merit.”

Huawei listed six examples in the filing, one in 2010 and five in 2018, where government action has cut or stopped US sales of Huawei gear – including the FCC’s move this year to bar US carriers from using Federal funds to purchase Huawei networking equipment. Huawei said all of these actions – purportedly to protect US national security – have severely restricted its ability, and the ability of others, to compete in the US market.

“As these comments will make clear, government interference that restricts competition results in significant costs to consumers in the form of higher prices, lower quality, reduced investment, and lower incentives to innovate,” said Huawei. The company is appealing to the FTC as its mandate is to protect consumers and industries from unfair competition.

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These “unfounded allegations” by the US government that the company is a security risk, have kept it out of the country’s telecommunications equipment market, costing American consumers US$20 billion in lost savings from the country’s development of mobile networks, Huawei said in the July FCC filing.

“In recent months, several US government agencies have targeted Huawei in a series of market interventions, citing vague and unfounded security concerns,” Huawei said in a separate statement on Wednesday.

“We have asked the Federal Trade Commission to work with their peers in government to ensure that the effects of these interventions are fully understood and accounted for. Rules based on arbitrary security concerns are anticompetitive, and will have lasting effects on US prospects in the digital economy, as well as consumer and business access to the best available technology at a fair price,” Huawei said in the statement.

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The Shenzhen-based company has encountered several setbacks in the US this year, as well as in some other developed economies including Britain and Australia, over alleged security threats posed by the company’s products and services.

Last week, Huawei and Chinese telecom equipment vendor ZTE Corp, were informed by Australia that they have been excluded from building the country’s 5G infrastructure after the government laid out new rules to ban equipment vendors that could be subject to extrajudicial directions from a foreign government.

Huawei countered by saying Australia’s decision was made on political grounds, a move that undermined fair trade and hurt the interests of local consumers.

Marise Payne, Australia’s new foreign affairs minister, on Monday defended the decision, saying it was not targeted specifically at Huawei and ZTE. She said it applied to any company that had obligations that clash with Australia’s national security.

“It’s targeted and aimed at solely protecting Australia’s national interests, and the protection of Australia’s national security. That is our first responsibility as a government, it’s our first responsibility as a national security committee,” she told Sky News on Monday.

Japan is also considering a ban on Chinese network technology being deployed in government systems for security reasons, in a move to align it with the US and Australia, Japanese business newspaper Sankei Shimbun reported on Sunday. Huawei said this was “unsubstantiated rumour, and not factual”.

In its filing with the FTC, Huawei urges the agency to use its powers to prevent an unjust burden on consumers and inefficiencies in US telecoms markets. The Chinese company also requests an opportunity to attend the FTC’s public hearings during autumn to discuss these issues in greater detail.