Responding to complaints of price discrimination, an official of China’s National Development and Reform Commission (NDRC) said that her agency will investigate allegations of monopolistic behavior in the broadband market involving the nation’s two dominant wireline carriers, China Telecom (CT) and China Unicom (CU). The remarks by NDRC deputy director Li Qing on a national news broadcast on Wednesday are considered highly unusual in that CT and CU are both controlled by the government. Together, CT and CU account for a two-thirds share of the Chinese broadband market. In an effort to slash consumer costs and boost network speeds, the government has endorsed plans to enable telcos, cable firms, and Internet service providers to invade each other’s turf and thus introduce new competition against CU and CT. During Wednesday’s broadcast, Li charged CU and CT with using their market power “to charge their rivals higher fees while offering favorable prices to companies that are not competing with them.” Li also accused the carriers of deliberately refusing to connect their networks so as to optimize network speeds and reduce operational costs. Describing the carriers’ actions as a potential violation of China’s antitrust law, Li affirmed that, if the allegations are confirmed, CT and CU could be held liable for fines that range from 1% to 10% of their annual revenues. Representatives of CU and CT have said they will cooperate with the probe.
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