Option goes to EC over illegal China modem subsidy claim

Belgium modem-maker Option asked the European Commission (EC), to investigate if China is illegally subsidising tech companies that produce wireless modems.

The complaint, which was filed in August is still being considered by the EC and centres around Chinese firms ZTE and Huawei, which hold 90 percent of the market

Jan Poté, a representative for Option, told TechEye: “We made this complaint because we feel that some companies in China are being given an unfair advantage.”

He said one example, although not necessarily what was detailed in the filing, was that the company had looked at what banks were giving in terms of credit.

“Banks lend companies one or two times more than their revenue. Before the recession this may have been as much as three or four times. However, what we’re seeing now is that some companies are getting 10 times more.”

Huawei in particular, Poté claims, has a line of credit far exceeding what could be considered normal. Option believes that “the selling practices of these Chinese competitors is and has been illegal under EU law”.

The rumour mill is saying that Option is peeved because Chinese competitors are being unfairly funded by the government and government funded banks. Poté said that he would not comment on if that’s the case.

“That’s private information,” he told us. However, there’s no smoke without fire, and when it enters into an EC dispute it’s made a heck of a lot more public – we’ll go ahead and guess that this is what the grumbling is about.  

This isn’t the first time the company has called out to the EC. Earlier this year it filed a complaint that Chinese companies were dumping wireless modems onto the EU market at absurdly cheap prices. The EC took Option’s side and is now reviewing the case.

Poté told us: “The EC now has to make a decision. We don’t know what the outcome will be though.”

A representative for Huawei told us: “Option’s claims are inaccurate and misleading and we will vigorously defend ourselves against this allegation,” before sending us the following statement:

“We are aware of reports that an anti-subsidy complaint has also been filed by Option, but that no decision has been made by the Commission on whether to initiate an investigation.  

“We consider the dumping and subsidisation complaints inaccurate and reject any accusations of injurious dumping and/or subsidisation.  We are dedicated to providing cutting edge technology and innovative products and solutions to our customers and end users, helping meet the rapid growth in European demand for mobile broadband technologies and contributing value to European telecom industry and society. We are fully committed to cooperating with the European Commission on these investigations.”

ZTE could not comment on the latest allegations because it does not talk about ongoing cases. It was more than happy to have its say on Option’s previous complaint regarding modem dumping.

A spokesperson for ZTE pointed us to a previous statement, which reads: “We have noted that the  European Union trade regulators have opened a investigation into a complaint that Chinese-made wireless modems are being dumped in EU markets.

“ZTE will support the EU in any investigation where relevant and will continue to pay close attention to how this investigation develops both from a market and legal perspective.  We are confident the EU will correctly assess the evidence put to them and come to a reasonable solution that has minimum impact on ZTE’s European operations and datacard business.”

We’ll have to wait and see but we’ll be keeping at least one eye open.