Can Huawei face fines like Google, Apple?

The European Union’s chief antitrust official, Margrethe Vestager, has made her name tackling big corporate fish in pretty unconventional ways. A ruling on Alphabet Inc’s Google, which came with a seven-figure fine, argued free services weren’t always good for the consumer, while those on Apple Inc and Starbucks Corp deemed that low taxes were illegal state aid (though some judges begged to differ).
True to form, Vestager — in partnership with Internal Market Commissioner Thierry Breton — is now aiming at a new antitrust target: unfair government subsidies from outside the EU. (They’re illegal inside the bloc, although the rules have been temporarily relaxed because of the pandemic.) Historically the preserve of trade lawyers and diplomats shuttling between foreign capitals and the World Trade Organization in Geneva, these subsidies are now seen as a competition problem that the EU’s executive arm in Brussels must address. And it wants expanded powers to do so.
Officially, the idea is to scrutinise government financing from any country outside the EU that would give companies inside the bloc an unfair advantage.
But just as Vestager’s focus on technology companies seemed deliberately targeted at the US, this proposal looks squarely aimed at China, whose rapid rise has become a global problem.
There’s an element of making up for lost time here. Chinese firms have poured an estimated 160 billion euros ($180 billion) of investment into the EU over the past decade, according to research firm Rhodium Group, with state-owned enterprises at one point accounting for the lion’s share (it has since fallen).
What was initially cheered as a welcome source of funding after the financial crisis has become a source of anxiety over an increasingly one-sided relationship.
German robotics firm Kuka AG is now China-owned; Chinese rail powerhouse CRRC is seen by Alstom SA and Siemens AG as a competitive threat; and telecoms-equipment maker Huawei Technologies Co has been accused of profiting from as much as $75 billion in Chinese state aid, according to the Wall Street Journal. (The company denies it.)
Back in 2013, then-EU Commissioner Karel De Gucht accused firms including Huawei of anti-competitive behavior driven by access to cheap capital, but plans for an investigation were shelved.
The case for giving new powers to Vestager’s division in this area, including the ability to issue fines, is that nobody else has been able to do much about it so far. The global trading system has been defenseless in the face of this tide of state support that helps companies undercut local competition. The WTO’s mechanisms are clunky and in need of reform.
US President Donald Trump’s barrage of trade tariffs has alienated allies while failing to fix the underlying problem.
An encouraging deal on reforming the WTO was signed in January by the EU, US and Japan, but it’s an early step.

—Bloomberg