China probes Qualcomm over anti-monopoly law

Qualcomm Inc. has revealed that China's National Development and Reform Commission (NDRC), which regulates prices, has begun investigating Qualcomm regarding compliance with the Chinese Anti-Monopoly Law. The NDRC told the mobile chip firm that the substance of the investigation is confidential.

Reuters reported last August that an official from China's NDRC put pressure on some 30 foreign firms at a meeting in late July to explain their actions in an antitrust context. Qualcomm appears to be the latest target of the Chinese government agency.

China's crackdown on foreign companies has been escalating in recent months.

The NDRC's charges against multinationals are multiple, ranging from antitrust, corruption and pollution to unfair business practices and others. GlaxoSmithKline (GSK) is one high profile company recently investigated by Chinese police for suspected widespread corrupt practices. Earlier this month, Reuters reported that China is likely to charge some of GSK's Chinese executives, but not the British drug maker itself.

Fresh in memory among U.S. high tech companies hassled by China this year is Apple. Beijing's government-run media zeroed in on Apple's customer service, with China Central Television accusing Apple of offering consumers shorter warranties compared with those in other countries, and of using refurbished parts for repairs.

Speculation as to why China has been attacking multinationals abounds. Some cite the slowing Chinese economy, while others refer to decisions emanating from the latest Communist Party Central Committee meeting. Meanwhile, the Chinese government is pushing for Chinese companies to compete harder against their foreign competitors.

Qualcomm told the Wall Street Journal recently that it expects to continue growing in China, but chief executive Paul Jacobs acknowledged U.S. restrictions on Chinese companies and revelations about surveillance by the National Security Agency are impacting its business in the fast-growing country.

"We are definitely seeing increased pressure," said Jacobs in an interview with The Wall Street Journal. "All U.S. tech companies are seeing pressure."

Cisco earlier this month warned that the company's revenue could drop as much as 10 percent this quarter, and continue to contract through the middle of next year, in part due to a backlash in China after revelations about U.S. government surveillance programs.

Qualcomm said that the company is "not aware of any charge by the NDRC that it violated China's Anti-Monopoly Law. Qualcomm added, "We will continue to cooperate with the NDRC as it conducts its confidential investigation."