China's State Administration of Market Regulation is investigating the firm due to complaints against its intellectual property rights licensing in China, a spokesperson for Ericsson told AFP.
The telecom gear maker earns about seven percent of its revenue in China, according to its 2018 annual report.
China's market regulator dispatched roughly 20 investigators to raid Ericsson's Beijing office on Friday, the Wall Street Journal reported earlier, citing a person familiar with the matter.
“Ericsson is fully cooperating with the investigation and will refrain from further comments while it is ongoing,” a spokesperson for the company said in an emailed statement.
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Ericsson and its US-based competitor Qualcomm own a large portion of patents connected to 3G and 4G mobile networks and devices and have come under fire for the high licensing royalties they charge.
Qualcomm in 2015 agreed to pay a 6.1 billion yuan (nearly $1 billion) fine and said it would modify its business practices in China to end an official anti-trust investigation triggered after unnamed industry players complained the firm was abusing its market dominance to charge high prices.
“At Ericsson, we license our industry leading patent portfolio on FRAND (Fair, Reasonable and Non-Discriminatory) terms and conditions and have always been committed to these FRAND principles,” a spokesperson for the company said.
China's homegrown tech giant Huawei has earned a large number of patents that companies will need to license as they roll out next-generation 5G mobile networks and devices.
Huawei is the world's biggest producer of telecommunications gear and has been under fire in recent months after the arrest of a top executive in Canada and a global campaign by Washington to blacklist its equipment over security concerns.