QUALCOMM, Inc. (NASDAQ:QCOM) has recently come under investigation over how the company licenses its patents and prices its chipsets in China. In response to the investigation, the tech titan commissioned an independent consulting firm to undertake an economic analysis of Qualcomm’s operations in China.
After the report was published, a well-known Chinese antitrust expert who co-wrote the report was removed from a government advisory post after state media reported he had received payments from Qualcomm.
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QUALCOMM, Inc. (NASDAQ:QCOM) responded to developments in the investigation on Thursday, August 14th, with spokesperson Christine Trimble telling Reuters, “Qualcomm paid Global Economics its standard rates for the firm’s services,” and did not have “any financial dealings” directly with the authors of the report.
A number of foreign technology firms have recently come under investigation by the Chinese government as the country intensifies efforts to make firms comply with its 2008 anti-monopoly law. The law calls for monetary penalties as much as 10% of a firm’s annual revenue.
Hired independent consulting firm
QUALCOMM, Inc. (NASDAQ:QCOM) said it the Chicago-based Global Economics Group to write the report, and that GEC independently employed Zhang Xinzhu, a member of the Chinese Academy of Social Sciences (CASS) and one of China’s leading antitrust experts, to co-write the report.
Antitrust expert Zhang Xinzhu sacked after Qualcomm report published
In another sign of the zeal with which top Chinese government officials are taking their anti-monopoly campaign, well-respected antitrust expert Zhang Xinzhu was sacked from his position earlier this week. According to an official Chinese Xinhua News Agency report on Wednesday, Zhang was fired from the State Council’s expert commission on competition issues for accepting “huge rewards” from Qualcomm.
Details on Qualcomm economic analysis
The Qualcomm analysis submitted to Chinese regulators in May had three principal authors, including Zhang. The internationally-known 40-year-old academic has undertaken expert analyses for several domestic conglomerates including China Mobile Ltd. (ADR) (NYSE:CHL) (HKG:0941), China Telecom Corporation Limited (ADR) (NYSE:CHA) (HKG:0728) and China Unionpay, as well as foreign firms involved in antitrust investigations over the last few years.
“Hiring economists to provide such economic analysis to antitrust authorities is routine practice in government investigations in China and around the world,” Trimble pointed out.
Statement from Zhang
In a brief email response to questions from Reuters on Wednesday, Zhang wrote: “My individual strength is too insignificant, and the machine of state too powerful. There can only be silence.”