China imposes record anti-trust fine on Qualcomm

 

 

 

 

 

 

 

BEIJING  |  2015-02-10 18:49:18

 

China imposes

record anti-trust fine on

Qualcomm

 

By Han Qiao, Jiang Xufeng and Zhao Chao

 

 

Chinese authorities have imposed a record fine of 6.09 billion yuan (994 million U.S. dollars) on mobile chip maker Qualcomm following an anti-trust probe, it was announced on Tuesday of February 10.

The National Development and Reform Commission (NDRC) said Qualcomm was found to have abused its market dominance, charging discriminatory fees in the Chinese market when licensing mobile chip technology.

“Qualcomm’s practices hampered innovation and technology development, harmed consumers’ rights and interests, and violated China’s anti-monopoly rules,” according to an NDRC statement.

The watchdog issued a fine of 8 percent of the company’s revenue in the Chinese market for 2013, totaling 6.09 billion yuan, the largest anti-trust fine in China’s history.

The NDRC said it started the anti-trust probe in November 2013 and that the fine would stop the company’s monopolistic practices, safeguard fair market competition and protect consumers’ interests.

It said Qualcomm improperly bundled unrelated licenses with baseband chip sales, forcing Chinese customers to pay for licenses they didn’t need.

San Diego-based Qualcomm said in a statement that it would honor the fine and modify its licensing practices.

“Qualcomm will not pursue further legal proceedings contesting the NDRC’s findings,” it added.

The company was also quoted as saying in the NDRC statement that it would continue to increase investment in China.

It cooperated with the probe and proposed a set of rectification plans, including not conditioning the sale of baseband chips on the chip customer signing a license agreement with terms that the NDRC found to be unreasonable or on the chip customer not challenging unreasonable terms in its license agreement.

The NDRC said it welcomed the company’s decision about investing in China and supported the company to charge a reasonable licensing fee for its technology protected by patents.

“We are pleased that the investigation has concluded and believe that our licensing business is now well positioned to fully participate in China’s rapidly accelerating adoption of our 3G/4G technology,” said Derek Aberle, president of Qualcomm, one of the biggest makers of mobile phone chips.

“We appreciate the NDRC’s acknowledgment of the value and importance of Qualcomm’s technology and many contributions to China, and look forward to its future support of our business in China,” Aberle added.

China has stepped up law enforcement against monopolies in recent years and a number of foreign and domestic companies have been fined for violating the country’s anti-trust law.

 

 

 

 

 

 

 

GUANGZHOU  |   2015-02-11 21:41:39

 

Chinese phone makers

welcome Qualcomm fine

 

By Zhang Yi, Wang Pan and Wang Qihou

 

 

Chinese cellphone makers on Wednesday of February 11 expressed their support of a record anti-trust fine levied on U.S. chip maker Qualcomm.

The National Development and Reform Commission (NDRC) ruled Qualcomm had abused its market dominance and charged discriminatory fees in the Chinese market when licensing mobile chip technology. The company was ordered to pay 6.09 billion yuan (994 million U.S. dollars).

Telecom giant Huawei told Xinhua that the NDRC’s decision would benefit telecom product manufacturers and Chinese consumers, as well as improve intellectual property protection.

Huawei said the decision would create a fairer competitive environment and would prompt domestic research.

ZTE also welcomed the anti-trust ruling as it would have a significant effect on the global telecom industry.

The NDRC’s investigation began in November 2013. The watchdog said the fine would stop the company’s monopolistic practices, safeguard fair market competition and protect consumers’ interests.

It said Qualcomm improperly bundled unrelated licenses with baseband chip sales, forcing Chinese customers to pay for licenses they did not need.

San Diego-based Qualcomm said in a statement that it would honor the fine and modify its licensing practices.

 

 

 

 

 

CHINA VOICE  |  2015-02-11 17:15:43

 

Qualcomm fine augurs

fairer market in China

 

By Zhang Zhengfu

 

 

The record anti-trust fine imposed by China on San Diego-based Qualcomm has stirred unease among foreign firms who perceive unfair treatment and a worsening business environment.

Associated with other anti-monopoly or anti-corruption probes against big foreign names, the fine, the largest ever in China, has made some foreign firms to conclude that they are “less welcome in China than before.”

Released on Wednesday, the results of the Business Climate Survey by the American Chamber of Commerce show that about half of the respondents feel less welcome in China.

However, a closer look at the cases will prove their concerns are misplaced.

In the case of Qualcomm, the mobile chip titan was found to have abused its market dominance, charging discriminatory fees in China when licensing mobile chip technology, said the National Development and Reform Commission on Tuesday.

Other cases should also not come as a surprise as companies like Microsoft have long been embroiled in anti-trust probes around the globe.

Be it the anti-trust probe against Qualcomm, or the anti-corruption investigations against GSK, the only reason behind the investigations is the fact that they have broken the law. It has nothing to do with where they are from.

The cases should be seen as signs that the world’s second-largest economy is working harder to make companies comply with regulations and build a more fair and equal market.

In this sense, China’s business environment is improving rather than worsening.

All companies, including the foreign ones, should applaud rather than feel appalled by the authorities’ increased efforts to fight monopolies and safeguard fair competition.

The Chinese market is not getting “colder”, as claimed by some. It is getting fairer and more open.

Foreign firms should no longer be dwelling on the “good old days” when they enjoyed the so-called “super national treatment”.

As China is building a fair market, no company will be allowed to break laws with impunity. Being a Chinese or foreign firm makes no difference.

State-owned giants China Telecom and China Unicom have been subject to anti-trust probes. Premium alcohol makers Kweichow Moutai and Wuliangye were each fined more than 200 million yuan last year for monopolistic practices.

The Chinese market might have got a little bit chillier, but only for those acting illegally, be they foreign or homegrown.

If Qualcomm got no punishment for what it did in China, all companies doing business in China should be really worried about the absence of law enforcement and a fair market.

 

 

 

 

 

 

COMMENTARY  |  2015-02-10 17:57:07

 

Qualcomm fine

shows China’s resolve

to regulate market

 

By Sun Ding

 

 

China’s record fine on Qualcomm shows its firm resolve to root out business malpractice and create an environment for fair competition both at home and abroad.

The U.S. mobile chip-maker agreed to pay a 975-million-U.S. dollar fine after it was found to have abused its market dominance in violation of China’s Anti-Monopoly Law.

Starting last year, the high-profile investigations into Qualcomm and other multinationals including Microsoft stirred unease in the Western business circles and in Western media, which accused China of targeting foreign firms.

However, their concerns were easily proved to be misplaced as state-owned giants China Telecom and China Unicom have been subject to anti-trust probes since 2011 while best-known alcohol makers Kweichow Moutai and Wuliangye were each fined more than 200 million yuan in 2013 for monopoly.

As no company is granted impunity in China, being a Chinese or foreign firm makes no difference.

In the case of Qualcomm, the company’s practices “hampered innovation and technology development, harmed consumers’ rights and interests, and violated China’s relevant anti-monopoly rules,” according to an statement issued by the National Development and Reform Commission.

The hefty fines indicate China’s strong determination to maintain market order and create a better investment climate.

Speaking at the World Economic Forum at Davos last month, Chinese Premier Li Keqiang stressed the need to create a better market environment for fair competition as part of the efforts to comprehensively deepen reforms.

China is committed to creating a favorable “soft environment” that features better market regulation and a world-class business environment established on market principles and the rule of law, Li said.

It is obvious that a clean, orderly and robust Chinese market with increasingly smaller room for malpractice is favorable for both domestic and international companies.

Viewed as signs that the world’s second-largest economy is working harder to make companies comply with regulations and build a level playing field, China’s anti-monopoly and anti-corruption efforts undoubtedly deserve applause.

 

 

 

 

 

 

COMMENTARY  |  2015-02-12 00:12:57

 

 

China’s fine on Qualcomm

not “economic nationalism”

 

By Wang Shang

 

 

China’s fine on Qualcomm is nothing but a legitimate act to regulate the market and create a fair environment for all businesses — Chinese and foreign.

However, the hefty fine has rattled Western media, which have hyped China’s nationalist sentiment.

The New York Times on Monday run a report saying that Qualcomm is a victim of China’s “economic nationalism” and that foreign technology companies are “bumping into a regulatory ceiling.”

This accusation is groundless and borders on absurdity. Qualcomm was fined because it has broken the law, not because it is a foreign company. What Qualcomm bumped into was malpractice, not “regulatory ceiling.”

It is simple and clear that Qualcomm has violated Chinese law. It is equally simple and clear that if one breaks the law, one suffers the consequences. The fine is a fair decision based on unequivocal evidence and China’s Anti-Monopoly Law.

Abusing its dominance in the industry, Qualcomm, for one thing, has been illegally charging companies what they call “Qualcomm tax.”

For instance, if a Chinese company installs Qualcomm chips on the cellphones they are manufacturing, the company is required to pay Qualcomm as much as 5 percent of the price of the finished product as license fee.

Practices of the Chinese regulators in the past years have clearly shown that they were not singling out foreign companies for antitrust investigations.

Kweichow Moutai and Wuliangye, the two best-known liquor makers in China, were each fined more than 200 million yuan (about 32 million dollars) in 2013 for abusing their dominance in the domestic market.

The New York Times also indicates that the Qualcomm fine is a move by China to suppress the foreign chip-making giant in order to boost its own microchips industry.

Of course, most Chinese companies in the industry welcomed the fine. They did so primarily because it helps build a regulated and fair market, not solely because it has undermined a competitor.

A level playing field is good for all players — Chinese and foreign. And the Chinese government has the responsibility to see it happen.

Qualcomm, along with many other foreign companies, benefits greatly from the Chinese market. Its earnings in China was almost half of the company’s total revenue in 2014.

The company should draw a lesson from the fine and change course in order to prosper in China.

 

 

 

 

 

 

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