{"id":3319,"date":"2015-02-11T14:50:04","date_gmt":"2015-02-11T14:50:04","guid":{"rendered":"http:\/\/ncjolt.org\/?p=3319"},"modified":"2020-06-04T20:53:38","modified_gmt":"2020-06-04T20:53:38","slug":"rock-the-boat-china-tips-the-boat-with-tsunami-like-antimonopoly-fine-against-qualcomm","status":"publish","type":"post","link":"https:\/\/journals.law.unc.edu\/ncjolt\/blogs\/rock-the-boat-china-tips-the-boat-with-tsunami-like-antimonopoly-fine-against-qualcomm\/","title":{"rendered":"Rock the Boat? China Tips the Boat with Tsunami-like Antimonopoly Fine against Qualcomm."},"content":{"rendered":"

Qualcomm, Inc., has agreed to pay the largest fine in China\u2019s corporate history to settle an antimonopoly claim based on its activities within the Asian superpower. Click here.<\/a> The San Diego based tech company manufactures computer chips used in smartphones, including those made by Apple, Samsung, LG, and Sony. Click here.<\/a> Many consider the company to be among the top manufacturers in mobile chips. Click here.<\/a> The payment of the fine marks the conclusion of a 14-month investigation by the Chinese government into Qualcomm\u2019s operations in China. Click here.<\/a>
\nThe People\u2019s Republic of China adopted its antimonopoly statute in 2008 for the express purpose of \u201cpreventing and restraining monopolistic conducts [and] protecting fair competition in the market, enhancing economic efficiency, safeguarding the interests of consumers and social public interest, promoting the healthy development of the socialist market economy.\u201d Click here.<\/a> The statute is applicable to conduct that occurs in the form of economic activity within the country, as well as foreign activity that has a restrictive effect on domestic competition. Click here.<\/a> This statute has provided China\u2019s National Development and Reform Commission (hereinafter \u201cNDRC\u201d), the agency \u201cin charge of the examination and regulation of price-related monopolistic activities\u201d with additional authority to conduct investigations and punish restricted activities. Click here.<\/a>
\nSince the law came into effect on August 1, 2008, has handed down some noteworthy fines against high profile companies. In its first investigation into an international company, the NDRC fined six manufacturers of LCD goods a total of $56.8 million. Click here.<\/a> Shortly thereafter, the NDRC fined two Chinese state-owned liquor companies a total of $71.8 million. Click here.<\/a> Until recently, this was the largest fine ever issued under the antimonopoly law. Click here.<\/a> But neither of these fines came close to comparing to the penalty facing Qualcomm.
\nAs a result of the NDRC\u2019s investigation, Qualcomm will pay a $975 million fine. Click here.<\/a> Additionally, Qualcomm will be forced to offer licenses to its current 3G and 4G essential Chinese patents, with royalties based on 65 percent of the phone\u2019s selling price \u2013 a significant decrease from the previous royalty calculation basis of 100 percent of the selling price. Click here.<\/a>
\nDespite the penalty\u2019s jaw-dropping effect, the NDRC\u2019s antimonopoly bureau maintains the position that the fine was lenient, representing less than 10 percent of what the statute permitted under the circumstances. Click here.<\/a> In support of this assertion, the bureau claimed that the motivation for the penalty was to restore fair market competition in China. Click here.<\/a> However, the fine represents a figure several times the agency\u2019s total fines for all of 2014. Click here.<\/a>
\nOthers are not so sure that Qualcomm won\u2019t be feeling the effects of this penalty throughout its entire enterprise. The fine alone represents 8 percent of the company\u2019s sales in China, click here<\/a>, a market that produces fifty percent of the company\u2019s annual revenue. Click here.<\/a> It will cost the company\u2019s sharedholders nearly 60 cents per share. Click here.<\/a> This despite the fact that Qualcomm has cooperated fully with the investigation and has agreed not to contest the massive fine. Click here.<\/a> The fine could also impact similar investigations into the company\u2019s activities in the United States and Europe, which are already underway. Click here.<\/a> Sanford C. Bernstein analyst Stacy Rasgon believes that the resolution may decrease the market price for Q\u2019s chips globally and may cost Q its deal with Samsung over the Galaxy S phone. Click here.<\/a><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Although China is likely glad that Qualcomm\u2019s monopolistic conduct has been addressed and penalized, the imposition of the NDRC\u2019s fine will undoubtedly have a lasting negative effect on the Chinese market.<\/p><\/blockquote>\n

With Microsoft, Daimler, and other tech companies facing similar NDRC investigations, click here<\/a>, the resolution of Qualcomm\u2019s case could go a long way in dissuading international tech companies from doing business in China.<\/p>\n","protected":false},"excerpt":{"rendered":"

Qualcomm, Inc., has agreed to pay the largest fine in China\u2019s corporate history to settle an antimonopoly claim based on its activities within the Asian superpower. Click here. The San Diego based tech company manufactures computer chips used in smartphones, including those made by Apple, Samsung, LG, and Sony. Click here. Many consider the company …<\/a><\/p>\n","protected":false},"author":1,"featured_media":3320,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[51],"tags":[],"_links":{"self":[{"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/posts\/3319"}],"collection":[{"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/comments?post=3319"}],"version-history":[{"count":1,"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/posts\/3319\/revisions"}],"predecessor-version":[{"id":7375,"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/posts\/3319\/revisions\/7375"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/media\/3320"}],"wp:attachment":[{"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/media?parent=3319"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/categories?post=3319"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/tags?post=3319"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}