China Holds Meeting with Korea- Seeks Advice against Qualcomm Inc. (NASDAQ:QCOM)

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By dmcIntire on August 22, 2014 Technology & Software

According to the latest news, Chinese regulators have been holding meetings with their counterparts in South Korea to discuss the violations of anti-trust law made by the United States company, Qualcomm Inc. (NASDAQ:QCOM). Rumors have it that the company will have to pay heavy fines once the regulation process completes.

Qualcomm Inc. (NASDAQ:QCOM) is not the only foreign company that will bear the scrutiny of China’s anti-monopoly law; almost 30 international companies have been penalized with the help of this law. Some critics are of the view that the law has been used unfairly and improperly against the foreign companies.

It is pertinent to note here that the Korea Fair Trade Commission had penalized the Qualcomm’s unit, which was based in San Diego, back in 2009 with a fine of $200 million. However, this time, the amount of fine can reach to as much as one-tenth of the annual revenues of the Chinese Qualcomm unit.

Last year, the company reported total revenues of $25 billion, and almost 50 percent of these revenues were derived from the Chinese market.

A person familiar with the matter said that the Chinese regulators were interested to know as to how Korea handled the issue of Qualcomm. The source further said that Chinese regulators cannot use the same method that Korea employed as the situation is different, despite the strict anti-monopoly laws in both the countries. The source further added that China takes higher royalties on the creative and intellectual properties than its counterpart. However, the high price is not an issue in itself; it becomes an issue when the practices of discrimination are found.

Since November 2013, Qualcomm Inc. (NASDAQ:

Qualcomm Inc. (NASDAQ:QCOM)

) has been under great scrutiny by one of the china’s anti-trust agency, NDRC, as to how the company prices its products and licenses.

Discourse between the monitoring and regulating agencies of two countries is quite normal, however, the experts are of the view that China has been relying on pressure tactics when it should be focusing on economic analysis instead. The experts say that Chinese regulators went to see their Korean counterparts months after the launch of a case against Qualcomm Inc. (NASDAQ:QCOM), which suggests that the regulators are looking for a legal point to build up their case against the company.

Rumors have that the goal of Chinese regulators was to get advice from Koreans as to how to build an economic argument against the respective company. Some critics are of the view that the Chinese authorities have reached the conclusion that Qualcomm Inc. (NASDAQ:QCOM) has been using discriminatory practices before even straightening up their facts.

Coming to the stock prices of Qualcomm Inc. (NASDAQ:QCOM), the company, on the last trading day, August 21, 2014, started its stocks at a price of $76.61 and closed at a price of $76.77. The company’s intraday range was recorded to be from $76.45 to $$77.31. Moreover, the company has a total market capitalization of $128.11 billion with a price to earnings ratio of 18.48.