EC investigates 3G modem imports

The European Commission is investigating mobile broadband modem manufacturers Huawei and ZTE over claims that they failed to declare receipt of Chinese government subsidies.

The accusation was made by Option, a rival manufacturer of modems based in Belgium, which has seen the importation of cheap, Chinese-made devices from both manufacturers cut deeply into its business.

Option, which is the only 3G broadband modem manufacturer located within the European Union, has had its complaint registered and upheld according to a document (warning, it's a PDF) discussed in the Official Journal of the European Union.

The Commission must now investigate Option's claims that Huawei and ZTE were in receipt of preferential loans, lowered income tax rates, and reduced import and export tariffs from the Chinese government which the companies failed to declare when importing their devices into the European Union.

In a regulation filed on 15th September, the EC investigators declare that "sufficient evidence of critical circumstances where for the subsidised product in question" has been found to cause "injury which is difficult to repair" to Option's business, as a result of "massive imports benefiting from countervailable subsidies in a relatively short period of time."

The regulation, which stipulates that all imported "wireless wide area networking modems with a radio antenna and providing Internet Protocol data connectivity for computing devices" must now be registered with customs at the time of importation, does not name the specific companies involved, but Australian site has discovered a report from the Hong Kong Trade Development Council that confirms the two firms accused are Huawei and ZTE.

Depending on the Commission's findings, the companies could find themselves on the receiving end of a large fine - or risk having their goods blocked at the border.