Chinese monopoly

In what can only be described as an odd twist, China has announced it is investigating two of its major state-owned companies for engaging in monopolistic behavior in China's broadband Internet market.

State media reported that officials have launched a probe into China Telecom Corp. and China Unicom (Hong Kong) Ltd., finally unleashing a high-profile domestic test of the country's nascent anti-monopoly law. A few months ago, officials acknowledged that as yet, foreign companies had been the primary targets of anti-monopoly investigations in China.

Its unclear what impact the investigation or subsequent rulings might have. China effectively blocks all international competition from its massive broadband and telecommunications market, deeming them too sensitive to turn over to outsiders. The case appears to be more about pricing than opening the field up to true competition.

"In the Internet access market, China Telecom and China Unicom combined occupy more than two-thirds of the share. With such a dominant position in the market, they practiced price discrimination, raising prices for companies that are competing with them, while giving discounted prices to non-competitors," Li Qing, an anti-monopoly official with the National Development and Reform Commission, was quoted as telling Xinhua, the Chinese government's news agency.