China Telecom, China Unicom Face Monopoly Probe

Chinese officials unveiled an unusual investigation into two major state-controlled companies over alleged monopolistic activity in the market for broadband Internet service, in a big test for China's three-year-old antitrust law.

The probe against telecom giants China Telecom Corp. and China Unicom (Hong Kong) Ltd. -- outlined by a senior antimonopoly official -- marks the highest-profile domestic monopoly case against major companies backed by Beijing. The state-run Xinhua news agency said the probe is China's first national case involving large enterprises under a new 2008 antimonopoly law. In the past, major state-owned companies have been largely exempt from such enforcement efforts, with their status as monopolies or oligopolies carefully tended by the government. The highest-profile cases so far have been aimed at foreign companies, such as Coca-Cola Co.'s failed $2.4 billion bid for China Huiyuan Juice Group Ltd. two years ago. Li Qing, deputy director of the price supervision and antimonopoly department of China's National Development and Reform Commission, said that the agency believes the two state-controlled operators are using what she said was a roughly two-thirds market share to charge rivals higher fees for broadband access while failing to optimize network speed. The NDRC—China's top economic-policy body—said in a statement to Xinhua that results of the probe would come out soon, though it didn't specify a time frame.