China is serious about its anti-monopoly policy, firing an economist for apparently helping Qualcomm prepare a report for its defense in a pricing investigation.
A researcher at the Chinese Academy of Social Sciences, Zhang Xinzhu, was taken out of a 21-member panel that advises the Chinese Cabinet on anti-monopoly matters after it was revealed that he worked for the U.S. firm that Qualcomm hired to create a report responding to accusations that the company violated the country's anti-monopoly law.
Reports from Chinese state media say that Zhang was dismissed because of "discipline violations" but the researcher countered that he was removed from the panel for standing up for the rights of foreign companies. "(My) individual strength is too insignificant, and the machine of state too powerful. There can only be silence," Zhang also added in an email responding to questions from Reuters.
Qualcomm also made a few clarifications. "Hiring economists to provide such economic analysis to antitrust authorities is routine practice in government investigations in China and around the world. Qualcomm paid Global Economics its standard rates for the firm's services. Qualcomm did not have any financial dealings with Professor Zhang," said Christine Trimble, Qualcomm spokesperson, in an email.
The series of anti-monopoly investigations that China has launched against foreign companies has prompted speculations that regulating bodies might be trying to bring down market prices forcibly or help Chinese companies against foreign competitors by handicapping the latter.
Qualcomm, for instance, is suspected of abusing its position in the market and overcharging for components, allegations that could bring fines of over $1 billion for the company if proven by the National Development and Reform Commission (NDRC). The NDRC is one of China's antitrust regulators.
China's anti-monopoly law was enacted in 2008. Welcomed by business groups, the law was meant to clarify operating conditions in the country but have since then been used to crack down on foreign companies more aggressively than home-grown corporations.
This is a cause of concern for the European Union Chamber of Commerce in China, saying that it has received reports that regulators are using "intimidation tactics" in pressuring foreign companies to simply accept punishments without going through a full hearing.
The NDRC, however, has said that it's implementing the law on both foreign and domestic companies because the overall aim is to protect the welfare of consumers. It cited China Telecom Corp and China Unicom as some of the domestic firms that have been subjected to investigations for anti-trust practices.
Aside from Qualcomm, Mercedes-Benz, BMW and Audi have also been the subject of scrutiny, accused of practicing anti-competitive behavior in the Chinese market.
