China Telecom, Unicom targeted in monopoly probe

Two of China’s three state-controlled telecom companies are under investigation over alleged monopolistic activity in the broadband internet market, The Wall Street Journal reported. The investigation of China Telecom (CHA.NYSE, 0728.HKG) and China Unicom (CHU.NYSE, 0762.HKG) is the first probe into domestic companies by the National Development and Reform Commission under a new 2008 anti-monopoly law. The companies “clearly occupy a dominant position in the market,” said Li Qing, deputy director of the price supervision and antimonopoly department of the NDRC. “They use this dominant position to charge their rivals higher fees while offering favorable prices to companies that are not competing with them. According to antitrust law, we call such behavior price discrimination,” Li said. Analysts said the move could reflect official frustration over internet services in China, where internet speeds are below half of global averages. The companies could face fines of 1-10% of their 2010 revenues.