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China probing allegations that Qualcomm overcharged local clients

Regulators are also investigating U.S. company InterDigital for overcharging clients

By Michael Kan, IDG News Service
February 19, 2014 04:22 AM ET

IDG News Service - A Chinese anti-monopoly investigation into Qualcomm is examining whether the U.S. company has been abusing its market position and overcharging clients, the nation's regulators said.

The National Development and Reform Commission (NDRC) had previously been mum on the investigation, but on Wednesday confirmed that it has been probing Qualcomm since November.

The investigation was sparked off by complaints from groups that alleged the U.S. company had been abusing its market dominance to charge higher fees, said Xu Kunlin, the head of NDRC's pricing supervision and anti-monopoly bureau, at a press conference.

The investigation is still in its early phase, and much more work needs to be done, according to the commission. In November, Chinese regulators conducted a surprise raid of two Qualcomm offices in China for documents.

Qualcomm originally mentioned NDRC's anti-monopoly probe back in November, but offered no details. The company has said it is cooperating with the investigation.

Its chips are in use by many local smartphone vendors in the nation. In last year's fourth quarter, both domestic and foreign handset makers shipped 100 million smartphones to China, now the world's largest market for them, according to research firm Canalys.

The NDRC said its anti-monopoly investigation reflected the complaints from clients, and was not part of any effort to foster China's domestic chip industry.

The commission last year also launched an anti-monopoly investigation into InterDigital, a U.S. company that holds 20,000 patents, but has drawn accusations of "patent trolling". In China, complaints were made that the company has been overcharging its clients over patent licensing, according to the NDRC.

In InterDigital's case, the company has made positive steps at cooperating with the anti-monopoly probe, the regulator said on Wednesday. As a prerequisite to end the probe, InterDigital has to agree to certain commitments to the NDRC.

The company has already filed to end the investigation, said Lu Yanchun an official with NDRC's pricing supervision and anti-monopoly bureau. The commission is studying the case, and will then make a decision in accordance with the law.

In December, InterDigital had alleged that Chinese regulators were threatening to arrest company employees as part of the anti-monopoly investigation. But earlier this month, the company said it had misunderstood NDRC's procedures and was cooperating with the nation's authorities.

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