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ZTE and Huawei could face EU probe over 'predatory' pricing

The two Chinese companies are accused of being subsidised by the government, and flooding Europe with unfairly cheap phones.

Chinese mobile makers ZTE and Huawei could be investigated over their pricing strategies in Europe.

European Union Trade Commissioner Karl De Gucht told Reuters he was prepared to probe both companies' alleged anti-competitive behaviour in order to protect Europe's economy.

De Gucht told Reuters that ZTE and Huawei "are dumping their products on the European market" (flooding the market with cheaper handsets than domestic companies). ZTE and Huawei are alleged to receive state support from the Chinese government, meaning they have cheap capital, which "creates a distorted playing field", according to De Gucht.

The companies specialise in budget handsets like the Huawei Ascend G510, which manages to pack Android Jelly Bean into a device costing just £130.

Both companies deny receiving state support.

"In Europe and in all markets, Huawei always plays fair and we win business and trust from our customers through our innovative technology and quality service, rather than via pricing or subsidies," Huawei said in a statement.

Prior to De Gucht's comments, Huawei's Western Europe president Tao Jingwen told the China Daily that his company was a scapegoat for rivals' failures. "Some European companies have blamed Chinese companies for their losses, but sometimes they were caused by their own laziness," he said.

ZTE has previously denied any links to the Chinese government. 

De Gucht's investigation is pending while he holds talks with the companies in the hope of resolving the issue. Though nothing has been solved after three rounds of negotiations, De Gucht is determined.

"I think it is better for the whole world economy and trade that these two big trading partners come to an amicable solution on what is in fact a very strategic and crucial sector," De Gucht said. "But you need two to tango and we have the necessary resolve to go for it if necessary."

ZTE and Huawei have been watched closely in the US, though the Americans were more concerned with national security than anti-competitive pricing.

Is it unfair that Chinese companies are able to offer cheaper smart phones? Or is it just healthy competition? Let me know what you reckon in the comments below, or on Facebook.