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China continues probe on Microsoft’s Nokia takeover

Source:Global Times Published: 2013-12-22 23:03:03

China's top commerce watchdog is taking a more prudent approach than usual to granting approval for US software giant Microsoft Corp's takeover of mobile telephone business from Finland-based Nokia, Beijing-based newspaper The Economic Observer reported Saturday.

Such acquisitions usually get approval from China's Ministry of Commerce after a 30-day first-phase investigation.

But currently, the deal has not been approved yet and is undergoing a second-phase anti-trust investigation, though regulators from some other countries and regions including the US have given the nod already, the report said, citing unnamed sources familiar with the matter.

The ministry was not available for interviews over the weekend.

The sources attributed the ministry's careful moves mainly to requests from domestic mobile phone manufacturers, including ZTE, Lenovo and Xiaomi, who fear that upon the completion of the transaction, Nokia will charge them high patent fees for the usage of valuable technology on handsets.

In the past, Nokia adopted a loose system for patent protection in China and only charged a few of the country's phone makers patent fees, but now it is likely to sign official patent licensing contracts with all domestic users or even charge them higher, according to The Economic Observer.

Currently, the company's patent fees are generally 2 percent of a device's selling price, said the report.

Nokia intends to consider patent fees a new avenue of making profit after selling its underperforming handset business to Microsoft, according to media reports.

Mark Durrant, Nokia's spokesman, said in an early interview with Reuters that the company did not widely license its patents so as to protect its mobile telephone business against the company's rivals.

"Once we no longer have our own mobile devices business, following the close of the [Microsoft] transaction, we would be able to explore licensing some of those technologies," said Durrant.

The once globally dominant handset maker has already started to shifts its focus to navigation business, technology patents and its networking equipment unit, as it failed to stand out in the fiercely competitive smartphones market headed by Apple and Samsung, according to the media reports.

Nokia's CFO Timo Ihamuotila said in the company's first-quarter earnings call in early April that the company is expected to gain 500 million euros ($684 million) in revenues from patents and intellectual property licensing this year.

The Economic Observer predicted that in 2014 Nokia could gain $1.1 billion in patent income from the Chinese mobile phone market, which US-based market research firm Strategy Analytics estimated will generate $55.5 billion in sales volumes next year.

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