Chinese regulator fires antitrust advisor over alleged kickbacks from Qualcomm

Claims researcher took money to throw off monopoly probe

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A Chinese academic has been booted from a government antitrust advisory committee amid allegations he accepted payouts from Qualcomm in exchange for giving testimony favorable to the company in an ongoing monopoly probe.

State-run media outlet China News Service reported on Wednesday that Zhang Xinzhu, director of the Research Center for Regulation and Competition at the Chinese Academy of Social Sciences, was removed from his position on the Chinese State Council's anti-monopoly commission for "disciplinary violations."

Citing an unnamed insider, the news agency claimed Zhang "violated the commission's work discipline" by accepting money from Qualcomm, in what some reports have described as "huge amounts."

Qualcomm is being investigated by China's National Development and Reform Commission, which has accused the semiconductor company of abusing its monopoly position in the mobile chip market by overcharging and squeezing out Chinese competitors.

In July, the commission ruled that Qualcomm did indeed have a monopoly – despite Zhang's evidence to the contrary – but it has not yet decided whether abuses have taken place.

Zhang denies his testimony was influenced by kickbacks from Qualcomm, saying the real reason he was dismissed from the commission was because he defended foreign companies.

In an emailed statement to Reuters, however, Zhang declined to discuss the matter further, saying, "[My] individual strength is too insignificant, and the machine of state too powerful. There can only be silence."

Zhang isn't the only one who suspects Beijing of wielding its antimonopoly law – which only came into effect six years ago this month – as a protectionist tool that favors local industry. In April, the US Chamber of Commerce, a pro-business lobbying group, sent a private letter to US Secretary of State John Kerry and Treasury Secretary Jacob Lew urging Washington to pressure China to ease up on foreign companies.

"It has become increasingly clear that the Chinese government has seized on using the [antimonopoly law] to promote Chinese producer welfare and to advance industrial policies that nurture domestic enterprises, rather than the internationally accepted norm of using competition law to protect consumer welfare and competition," the group said in its letter, which was obtained by Reuters.

Among the other US firms that have felt the sting of Beijing's antimonopoly whip is Microsoft. In July, Chinese authorities simultaneously raided four of the software giant's offices across the country, seizing financial records and other documents over charges similar to those leveled at Qualcomm.

Qualcomm has not responded to The Register's request for comment on the Chinese government's allegations against Zhang. ®

Updated to add

After publication, Christine Trimble, Qualcomm's vice-president of public affairs, had this to say to The Register:

Qualcomm engaged the US firm Global Economics Group LLC to perform an economic analysis for submission to the [National Development and Reform Commission] NDRC in connection with allegations that Qualcomm may have violated the [anti-monopoly law] AML.

Professor Zhang is one of several highly-respected, expert economists who work for Global Economics, and was identified as one of three principal authors of the economic analysis when it was submitted by Qualcomm to the NDRC. Qualcomm paid Global Economics its standard rates for the firm’s services.

Qualcomm did not have any financial dealings with Professor Zhang. Hiring economists to provide such economic analysis to antitrust authorities is routine practice in government investigations in China and around the world.

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