Brussels partly drops threats against ZTE, Huawei

The European Commission has dropped its threat to launch an investigation into alleged dumping by Chinese mobile equipment manufacturers, although the European Union's (EU) executive body said it still needs more time to determine if an investigation into illegal subsidies is required.

"Today's decision not to pursue the anti-dumping part of this possible trade defence action is a significant step towards addressing the mobile telecommunications case in its entirety," said EU trade chief Karel De Gucht.

However, the Commission said further analysis has shown that the "essence of the problems posed by Chinese competition on the EU market lies in the subsidisation of the mobile telecommunications networks".

It said the decision in principle concerning the anti-subsidy investigation therefore still stands, although such a probe would not be launched for the time being "to allow the continuation of the negotiations with the Chinese authorities towards an amicable solution addressing the EU concerns with respect to subsidisation."

De Gucht told a press conference in Brussels that he would like to resolve the situation by the summer, according to Reuters.

The Commission said last May that it was ready to launch an investigation over alleged dumping by, and subsidies for, Chinese mobile equipment manufacturers, even though European manufacturers were clearly not in favour of a probe. Such an investigation would largely concern Huawei and ZTE, the two leading Chinese vendors operating in Europe.

In September the Commission was forced to deny a report that suggested it was delaying the investigation into the business practices of Huawei and ZTE until after European vendors had secured satisfactory slices of a massive TD-LTE tender launched by China Mobile.

Since then, Ericsson, Nokia Solutions & Networks and Alcatel-Lucent have all secured large network contracts in China after the country's three main mobile operators won TD-LTE licences and started naming vendor partners.

Alcatel-Lucent announced a further win in China on Thursday: the company has signed a €750 million ($1 billion) deal with China Mobile to help build the operator's all-IP ultra-broadband network.

For their part, Huawei and ZTE continue to invest in Europe and see further growth in the region. In January Huawei said it spent $3.4 billion with European suppliers in 2013, and predicted the amount will continue to increase as the vendor expands its European presence.

The European Commission has previously noted that China exports telecommunication network equipment to the EU market with a value of around just over €1 billion per year.

For more:
- see this statement from the European Commission
- see this Reuters article
- see this Alcatel-Lucent release

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