Confirms cartel. Weldon notes "China allows foreign vendors to claim a maximum 11% of the wireless market; Alcatel-Lucent and Nokia each have an 11% share." (Jessica Lipsky, EE Times http://bit.ly/china11share) Whether China will allow the merged company 22% or only 11% is a major factor in the future success of the company, but nothing is decided. Lipsky quotes Weldon, "I think what is definitely true is we will both be stronger in wireless in either company. We’re hopeful that means we can maintain the aggregate market share and not have that renormalized.”
Fearing bankruptcy of Alcatel and Nokia, the EU threatened high "dumping" tariffs on China's Huawei and ZTE. The Chinese were taking market share and driving down prices. The threat was highly credible. The U.S. had blocked Huawei, citing "security" but without any proof. EU Trade Commissioner Karel DE Gucht went public with the statement below.
In 2014, the tariff investigation was put on hold. The industry rumor was the governments reached a behind the scenes agreement on market share. China allowed Alcatel and Nokia a share of the Chinese market and Huawei/ZTE accepted a limit on their market share in Europe. Equipment prices went up.
Alcatel still isn't profitable but has done well enough the stock price is up 150% since 2013. That wasn't enough for Michel Coombs to be confident in the independent company, especially as Alcatel's key customers such as AT&T and Verizon have cut spending. Both have built LTE to more than 95% of their territory and have promised the street they will hold back. The French government went along in the death of a national champion because they feared otherwise it would need a bailout. (Huawei claims high profits but as a private company does face the same reporting rules. ZTE has been struggling, especially in handsets.)
Alcatel doesn't have a subsidiary in China but instead operates through a joint venture, Alcatel-Shanghai Bell. The Shanghai Bell holding has long made Alcatel "honorary Chinese." Alcatel refuses to reveal how much of the joint venture they hold and it may well be only a small plurality of shares.
With government backing the cartel, there's no fear of antitrust action.
EU on tariffs http://trade.ec.europa.eu/doclib/press/index.cfm?id=898
Statement by EU Trade Commissioner Karel De Gucht on mobile telecommunications networks from China
- What is the current value of such telecommunication network equipment exports from China into the EU?
China exports telecommunication network equipment to the EU market with a value of approximately just over 1 billion euros per year.
- What is an ex officio trade defence case?
An ex officio trade defence action allows the European Commission to launch a trade defence investigation on its own initiative without an official complaint by the EU industry. This possibility is particularly important as it offers a 'shield' when the risk of retaliation against European companies asking for trade defence instruments is high. Such an action can be focused on either an anti-dumping or anti-subsidy investigation or both. Any launch of such an investigation is supported by prima facie evidence of unfair international trade practice and the economic difficulties caused by it.
- What are trade defence instruments (TDIs)?
Trade defence instruments - anti-dumping, anti-subsidy and safeguards – address unfair practices occurring in international trade. Anti-dumping is the most frequently used form of trade defence. According to the World Trade Organisation (WTO), all its members, including the EU, have the right in some well-defined situations to impose additional duties on imported products to prevent damage to their domestic industry.
An EU industry can complain to the European Commission if it suffers from unfair competition as a result of an imported product being subsidised by its country of origin or being sold in the EU at prices lower than its market value. The complaint must be supported by evidence of the unfair practice and of the economic difficulties caused by it. The European Commission investigates the allegations and, if justified, proposes anti-dumping or anti-subsidy measures. In exceptional cases, the European Commission can launch an investigation at its own initiative – known as an 'ex officio' case.
Facts and figures on the European Union's trade defence actions:
The European Union is a moderate user of trade defence instruments. In terms of trade volume, these measures only have impact on around 0.25% of EU imports. At the end of 2012, the EU had 102 anti-dumping (AD) and 10 anti-subsidy (AS) measures in force and an additional 19 anti-dumping and 6 anti-subsidy ongoing investigations initiated during the year. In comparison, according to the first-half 2012 data submitted to the WTO, the US have 232 AD and 50 AS measures in force, India - 222 AD measures, Turkey - 118 AD and 1 AS measure, China - 110 AD and 4 AS measures and Argentina - 87 AD and 1 AS measure.
For further information: