Chinese antitrust regulator claims to have substantial evidence against Qualcomm

Chinese antitrust regulator claims to have substantial evidence against Qualcomm

Summary: China's top antitrust regulator will add more manpower in 2014 as the country is set to redouble its efforts to battle price fixing, state media reported last week.

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TOPICS: Legal, China
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The National Development and Reform Commission (NDRC), China's top economic planning body, has obtained "substantial evidence against" Qualcomm — a leading US chipmaker — in a price-fixing accusation, Xu Kunlin, head of the NDRC's anti-price-fixing bureau, told official English newspaper China Daily on December 12.

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Xu didn't elaborate further on the evidence against Qualcomm in the China Daily report. It is the agency's first public response on the case.

In late November, Qualcomm said that China's NDRC had commenced an investigation of the company, relating to the anti-monopoly law in China. Denying that the company is aware of any charge by NDRC under the law, Qualcomm said in the statement that it will continue to cooperate with the NDRC as it conducts its confidential investigation.

In an email reply to Reuters, Qualcomm said that it believes its business practices to be "lawful and pro-competitive". The company is also "looking forward to a first meeting with the agency", according to a spokesperson with Qualcomm.

Xu, the official with China's top anti-trust regulator, told China Daily that its antitrust probes focus on six industries, including aerospace, daily chemicals, automobile, telecommunications, pharmaceuticals, and home appliances. Besides Qualcomm, the agency is also probing an alleged vertical monopoly in the supply chain of imported cars.

The NDRC has enhanced its anti-monopoly enforcement during the past several months. The agency slashed record fines to six milk powder companies, including Mead Johnson Nutrition and Danone, and punished several domestic jewellers that were found to be manipulating the prices together, Reuters revealed.

Xu also said that his Beijing department and local price supervision offices will recruit at least 170 new employees for the antitrust law enforcement team. The Beijing office currently has 46 employees, and 20 of the 170 new hires will join the office later.

Headcount expansion will ensure scrutiny of business practices that "may lead to unreasonably high prices for consumers and those industries that harm the consumers the most", Xu said in the report. It also reflects China's determination in coping with price fixing, as the central government these days has vowed to limit the number of government employees.

Topics: Legal, China

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  • Price Fixing

    If a business charges less than his competitors, he is engaging in cutthroat competition. If he charges more than his competitor, he is a monopolist exercising his monopoly power. And if he charges the same price, he is guilty of price fixing. No matter what price a businessman charges, he is guilty.

    Businesses have the right to charge whatever price they choose for their products, for any reason or no reason at all. It's called "freedom". If they find it beneficial to call up their competitors and discuss pricing, that is within their rights and violates nobody else's rights. They have no right to force other companies to charge a particular agreed-upon price.

    The anti-trust laws are unnecessary, non-objective, ex-post-facto laws that have no place in a free society and that violate the rights to property and free trade. Of course, nobody would ever mistake China for a free society, but the same principles apply in semi-free countries in Europe and North America.
    FDanconia
    • tell that to the gasoline companies

      It's a great sentiment you have there, I think no one could fault your principles. There are commodities that must be purchased though, such as gasoline, that hurts consumers when the price fixing model is allowed.
      I don't care if watch makers, or smart phone makers, or even powdrered milk makers do it. I can avoid their products if I feel the price is too high, but I can't avoid buying electricity, transportation, food staples, housing, etc.
      copracr
      • Principles??

        FDanconia can certainly be faulted -- for the *lack* of principles. Falling on the "freedom sword" is fine by them, but not fine by me.

        Furthermore, perhaps *you* can't "avoid" buying commodities, but there are people out there who do practice "freedom" to the highest degree. Off-grid, self-sufficient families/communities are no longer the "fringe".
        alboulley
        • That may be true for some...

          "Furthermore, perhaps *you* can't "avoid" buying commodities, but there are people out there who do practice "freedom" to the highest degree. Off-grid, self-sufficient families/communities are no longer the "fringe"."

          That said, for most people, going off the grid may not be a feasible option. It's easier if it's a community doing this, since the support would be much more apparent there, but most people find it easier to pay someone else to "do it for them" these days.

          Also, while I am certainly open to the possibility that I am wrong about this, I do think that whatever benefits there may be to having a single provider (it would be far less likely that a single provider would be a fly-by-night company) have to be tempered with the responsibility facing such a provider. While supply and demand may not necessarily apply, except in the sense of "those that control the supply make the demands", they still need to be fair about pricing, because even if customers are in no position to take their business elsewhere, it will attract a lot of negative attention regardless.
          Third of Five
      • Rights

        Any time a producer raises his price, it hurts consumers. Shall we disallow raising prices?

        Consumers do not have a "right" to a particular price for a product. They only have a right to purchase products that producers offer voluntarily.

        Governments have done incredible long-term harm to consumers by turning the markets for products like water, electricity and natural gas into governmentally controlled monopolies. Talk about price fixing. When the government fixes the price, and prevents competition, *that's* when consumers are massively harmed (and their rights massively violated).

        The products that "must be purchased" are the ones that it is most important (and most valuable to the consumer long-term) if they are left the most free.
        FDanconia
    • Sadly, you aren't kidding.

      That's a brilliant rationalization in your first paragraph. Not so brilliant that it's true, mind you, but enough to indicate your bias. And it's your "right" to prefer a raw, unfiltered, non-pasteurized version of capitalism -- but thankfully national governments are much wiser than ye. The version of capitalism you champion, I consider to be cannibalistic and hence self-defeating. Whether in the U.S. or in China, antitrust law is perfectly aligned with the principles which lead to civilization and "humanity" itself.

      You appear to support the ideology that freedom means "do anything you want" in spite of moral or legal objections. Bravo for you, sophomore. Corporations should be allowed to jeopardize segments of the economy, just so they can make a few extra billion? Great plan... probably every single business out there would stand to benefit by practicing the "FDanconia" form of capitalism. Oh and we consumers would then benefit too, right?

      Anti-trust laws... violate the rights to property and free trade?? Wow. I'm still astounded by the brash "logic" of your first paragraph. Thank goodness that most world governments *disagree* with your foolish assertion about the "right" of a business to "charge whatever price they choose". Let me just stop here, before I thrash your plutocratic dogma any further.
      alboulley
      • Freedom

        Freedom does not mean "do anything you want in spite of moral or legal objections." Freedom means the right to own property, which includes the right to do whatever you want with that property so long as you do not damage the property of others in the process. My right to extend my fist ends when it contacts your nose. Nobody is forced to buy the products of any business, so if a business is doing something you deem immoral, you simply do not purchase their products.

        It's called freedom. Capitalism is merely the economic system that occurs when people are free. Capitalism is incredibly poorly understood worldwide, because it is not taught in our educational institutions. Give Ludwig von Mises' "Human Action" a read.
        FDanconia
  • Tit for tat

    Probably Chinese revenge for Huweai and ZTE.. That and they've probably stolen qualcomm's design.. So kick them out and make our own cheaper.. Typical Chinese ploy..
    Nick Zamparello
    • Lots of «probably»s there,

      Nick, but not a shred of evidence. Surely you can do better ?...

      Henri
      mhenriday
      • But the 'evidence' can be so easily hidden...

        until it it too late for its discovery to have any impact. The Chinese know this very well.

        Perhaps you missed the news item: even the Russians are very upset with the Chinese now for stealing their design IP for the military hardware they have been selling the Chinese in recent years. And I certainly hope you didn't forget the earlier news item about how they hacked into US military contractor computers to steal essentially ALL of our advanced design IP.

        The Chinese have established their habit of stealing IP.
        mejohnsn