China investigating Qualcomm, InterDigital (Update)

February 19, 2014 by Joe Mcdonald

Regulators are investigating whether U.S. technology companies Qualcomm and InterDigital violated China's anti-monopoly law by charging excessive fees for patent licenses, a government spokesman said Wednesday.

Regulators began separate investigations of the two companies in mid-2013 following complaints, an official of the Cabinet's planning agency said at a news conference. The official, Xu Kunlin, said they were suspected of "abusing their dominant market position" and charging "discriminatorily high fees" but gave no details.

China is a major producer of mobile phones and other electronics and the communist government has complained about the high cost of licenses for foreign technology. Beijing has tried to reduce reliance on foreign know-how by investing billions of dollars to develop its own mobile phone, encryption and other technology.

Beijing is stepping up scrutiny of foreign companies under its 6-year-old anti-monopoly, anti-bribery and other laws.

In August, five foreign milk suppliers and one based in Hong Kong were fined a total of $108 million on charges of price-fixing. Employees of foreign drug companies have been accused of bribing doctors to use their products.

Qualcomm Inc., based in San Diego, California, and InterDigital Inc., in Wilmington, Delaware, have previously disclosed they were under investigation but Wednesday's comments were the first by the Chinese government.

Authorities are considering a proposal by InterDigital to resolve the investigation of that company by making changes in its business practices, according to Xu. He said the government is considering the proposal and gave no details.

The investigation of Qualcomm Inc. still is underway, Xu said.

There have been few court rulings so far on cases under the 2008 anti-monopoly law. That has fed uncertainty about how it will apply to global companies that are eager to expand in the world's second-largest economy.

Chinese regulators have cited the law in ordering changes to acquisitions or business practices. In 2009, they blocked Coca-Cola Co. from buying a Chinese fruit juice producer.

Business groups welcomed the law as a step toward clarifying operating conditions in China. Since then, they have said it is enforced more actively against foreign companies than against their Chinese rivals.

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