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Europe Going Soft on Anti-Dumping Investigation into Huawei and ZTE

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The European Union is likely to defer an investigation into whether China's Huawei and ZTE benefited from unfair state aid until after a major Chinese telecoms tender is awarded.

The EU trade commissioner, Karel De Gucht is known to be keen to pursue the case, but is now inclined to bury the case -- but only if European vendors are awarded a sizeable chunk of Chinese LTE infrastructure contracts.

Although the EU is said to have found proof that the two Chinese companies did benefit from state-aid, which would be illegal in Europe, there have been serious concerns raised that European vendors could suffer if the Chinese government retaliated against EU sanctions.

It's estimated that around half of mobile network infrastructure sales this year could be awarded by China's big three mobile networks.

Earlier reports had suggested that Karel De Gucht would lay off the case if European suppliers were granted around a third of the Chinese infrastructure contracts.

Both Huawei and ZTE have denied receiving state support, although it has been noted that funding from state-owned banks is unusually generous for companies of their size.

An EU report from early 2011 noted that ZTE's lines of credit now amount to USD25 billion, which is exceptionally high for a company with annual sales of just USD8 billion. The commission believes Huawei also benefited from large credit lines, including a $30 billion facility from China Development Bank.

On the web: Financial Times

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Tags: european commission  huawei  zte