EU Set To Probe Alleged Chinese State Subsidies

The European Commission (EC) is reportedly in the final stages of launching a formal case against China over allegations that it has afforded Chinese telecoms companies illegal state subsidies in order to undercut its rivals in the European Union.

According to The Financial Times, representatives from all 27 EU member states were informed about the investigation at a closed-door meeting last week, ahead of a formal case which could begin as early as next month.

‘Solid Evidence’

Huawei and ZTE have been the chief subjects of this investigation, which began some months ago, and member states have been told that the commission has “very solid evidence” that these companies have benefited from government subsidies.

If it is determined that China has acted illegally, then Chinese companies could be subjected to punitive tariffs, although member states would have to approve them. This could prove problematic given that many European telecommunications companies have invested in China and fear retribution.

Any investigation would be the first that the EC has opened by itself and not in response to a complaint by an individual company.

Earlier this month, Huawei signed a deal with O2 for its first major management services agreement in the UK, while ZTE had announced a number of low-cost devices for the UK market, including the Light Tab and the Tania Windows Phone.

“Huawei has not received any communication from the European Commission regarding an investigation, but we are aware of media reports on this matter,” a Huawei spokesperson told TechWeekEurope. “We deny any claim that Huawei employs dumping practices and has benefited from illegal state subsidies. Huawei also objects to the investigation that the European Commission is reportedly launching on the basis of these claims.”

“The European Commission has always been a proponent of fair and open competition; Huawei applauds the Commission’s position on this, and abides by such principles when competing in the market,” the spokesperson added. “Huawei is convinced that the globalization of the telecommunications industry requires an open environment, where increased investment and smarter innovation will spur economic growth and benefit consumers in Europe and worldwide.”

ZTE had not responded to requests for comment at the time of writing.

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