China’s Antitrust Enforcement Continues to Grab the Domestic and International Spotlight

With the New York Times reporting on the AML enforcement uptick in China, including SAIC’s investigation of Microsoft, and a concurrent article in Xinhua, China’s antimonopoly regime, including its application to IP is seizing an increasingly larger piece of international attention by the media and industry.

The Times notes that “Microsoft; the San Diego-based chip maker Qualcomm; Daimler , the German auto giant; and other formidable companies are on the defensive.”  The Xinhua page is entitled “Once Again Brandishing the Sharp Sword of China’s AML policy in 2014.” This webpage especially focuses on foreign companies.   Yet, MofCOM at the same time is insisting that foreigners are “steadfastly being treated equally” under the AML regime: “坚持内外一致原则.”:  Indeed, Chinese officials have been steadfast in rejecting notions of discriminatory treatment for some time in the face of foreign concerns: “It should be noted that the AML will be uniformly and equally applicable to both domestic and foreign enterprises of all types without any discriminatory treatment.”  said DG Shang Ming of MofCOM back in 2009 in an interview with the ABA.

The link between IP and antitrust in China’s current efforts is hardly surprising.  I noted in 2012 that at the very least the IP background of many of the senior competition officials in China is likely to inform their approach towards competition law.  DG Shang Ming, for example, formerly head MofCOM’s activities on IP before he became in charge of its antitrust division.  Chief Judge Kong of the IP Division would certainly bring his prior experience in the Administration for Industry and Commerce to bear on IP issues and antitrust.  I also noted at that time that “IP is as much a part of China’s vision of its market-oriented competitive advantages, as is the competition law.”   Wen Jiabao’s oft quoted view that “the future of competition in the world is intellectual property” (2004), could equally apply to competition including the AML which was then under debated and ultimately adopted in 2008.

What is the Chinese press saying? The following is a partial summary by Ms. Yao Yao, an LLM candidate at Fordham Law School:

According to the news from SAIC, the antitrust investigation against Microsoft began in June.  Ni Nanguang(倪光南), of the Chinese Academy of Engineering, Institute of Computing Technology, Chinese Academy of Sciences, said: ”Microsoft system and office software source code is not completely open, for example, some of the interfaces information is not enough open.  The third-party software is hardly compatible with Microsoft so that it difficult to enter the market.  In addition, Microsoft is bundling the browser and some players when it sale the system and software so that it is influence the market space for the third party.”   Ni Nanguang also said:”China might learn the foreign antimonopoly experience, both the problem of compatibility for no inter-operability and tying.”  The Xinmingwanbao noted” If Microsoft is confirmed as a monopoly, it’s good for the local company to get the opportunity to develop. ”

The Chinese press also noted that on July 11, Qualcomm’s president Derek Aberle and his team visited the National Development and Reform Commission for a third time.  The tone of the Chinese media is that the trouble of Qualcomm’s is not small.   In this latest investigation, the investigators of NDRC focused on some aspects such as using the machine as the basis for calculating the license fee, and standard essential patents and non-standard essential patent bundled licenses; requiring the patent licensing fee for expired patents, patent licensing and sales of bundled chips; refusing to license patents and some additional unreasonable trading conditions in patent licensing and chips.   China Trade News said: ”The monopoly of Qualcomm was confirmed.   Qualcomm abused the market domain position by collecting high licensing fee, bundling, asking terminal factory cross-licensing for free, refusing to licensing or bundling with additional unreasoned condition to competitors.   Qualcomm may be punished one billion dollars. ”  A Chinese electrical  engineering website  noted: “ although the AML investigation of Qualcomm begain in the 3G period, however it became especially prominent with 4G. The most important reason is that that domestic 4G technology is much more mature than 3G technology. “ 对高通的反垄断调查早在3G时代就开始了,但4G时代的声音却格外响亮,最重要的原因是,国内的4G技术(TD-LET),比3G技术(TD-SCDMA)成熟得多.”  The same article noted that “if the licensing fee cannot be lowered, it will influence the final price of 4G mobile. “

Let’s see how things develop…

The views expressed here are the authors’ own.

 

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