Fine for Qualcomm fair for the market
Criticizing the 6.088-billion-yuan ($975 million) fine imposed on chipmaker Qualcomm for violating China’s monopoly laws, someWestern media outlets say it shows that foreign capital is less welcome in China today. This obviously is not the case.
The fine imposed on the US-based company by the National Development and Reform Commission may be huge, but the legal action was absolutely necessary to establish fair competition in the market.
Since Qualcomm has violated the Anti-Monopoly Law, the NDRC has also directed it to collect royalties on 65 percent of the selling price, instead of the full price, of mobile phones, and offer licenses for its 3G and 4G patents to Chinese mainland companies, separately from its other patents.
These measures will prompt Qualcomm to adopt a fair business model, warn other companies not to indulge in monopoly activities and eventually help create conditions for open competition and to protect the interests of downstream manufacturers and customers.
Because of its many patent rights and monopoly practices, Qualcomm compelled companies that bought its cellphone chips to pay the patent fees repeatedly.
By violating the principle of fairness and making profits by using its technological advantage, theUS company has not only undermined the interests of cellphone manufacturers, communication equipment makers and communication service providers at home and abroad, but also made it difficult for other chipmakers to develop their potential. Worse, the exorbitant patent fees and prices charged by Qualcomm have been passed down to customers.
According to Qualcomm’s “reverse patent license” permission, manufacturers that use its chips should allow Qualcomm to use their patent free. Such despotic practices allowed Qualcomm to not only make high profits, but also block other companies’ market opportunities.
Qualcomm’s monopoly activities deserve severe punishment. At a closed-door conference at the Institute of Electrical and Electronics Engineers in Beijing on August, 2014, Qualcomm was boycotted by companies such as Intel, Microsoft andHuawei, and the conference ended up with Qualcomm’s rights as a patent holder being restricted.
At the enterprise level, the rectification measures that the NDRC has imposed on Qualcomm are more important than the fine for creating fair market competition environment and protecting consumers’ interests. It shows the Chinese market will not put up with the monopoly activities of enterprises using their technological advantage to undermine fair competition and consumers’ interests. All enterprises have to compete fairly, respect the market laws and ensure that they do not trample on consumers’ interests in their quest to make profits, which is the international practice.
The fine imposed on Qualcomm also shows China is resolute in its decision to improve the rule of law in the market, even though the company didn’t stop its public relations activities during the entire period of anti-trust investigation. China BusinessNews reports show top Qualcomm leaders visited NDRC seven times for negotiations since October 2014. The anti-trust investigation against Qualcomm has become a majorUS-China issue. Many seniorUS officials and organizations, including President Barack Obama and the American Chamber of Commerce in China, have commented on the case. But none could help Qualcomm escape the punishment it deserved.
According to the 25thUS-China Joint Commission on Commerce and Trade talks in December 2014, the list of fruits showed China has been improving the rule of law, making efforts to establish a fair and transparent market environment, which enable the market to play the decisive role in resource distribution.
From this angle, the Qualcomm case also shows China’s determination to improve rule of law, and treat all companies equally according to law, which is the right direction. The author is a researcher on American studies with the Chinese Academy of Social Sciences.