European Commission Opens Investigation into Qualcomm’s NXP Acquisition
The European Commission opened an investigation on Friday into Qualcomm’s bid for the Netherlands-based NXP Semiconductors company. The commission said it has concerns the deal could lead to higher prices, less choice and reduced innovation in the semiconductor industry.
It’s not the first time when we see Qualcomm being a party of a legal process. Last month the American chip maker needed to pay almost $1 billion to Blackberry for its practices. The acquisition of NXP Semiconductors is also an allegedly questionable move and is now under the close scope of the European Commission.
The $38 billion deal would merge two major players in the semiconductor industry. While Qualcomm eyes this move as a possibility of entering the Internet of Things market and automotive sector, the European Commission finds it as a possible breach of EU Merger Regulation.
The Commission listed three preliminary concerns in the official press release.
- The merged entity would hold strong market positions within both baseband chipsets and NFC/SEs chips, and would have the ability and incentive to exclude their rival suppliers from these markets through practices such as bundling or tying.
- The merged entity would have the ability and incentive to modify NXP’s current intellectual property licensing practices, in particular in relation to NFC technology, including by bundling the acquired NFC intellectual property to Qualcomm’s patent portfolio. The Commission will investigate whether such conduct could lead to anticompetitive effects, such as increased royalties for customers and/or exclusion of competitors
- The merger would remove competition between companies active in the markets for semiconductors used in the automotive sector and, in particular, in the emerging Vehicle-to-Everything (“V2X”) technology, which will play an important role in the future development of “connected cars”.
The EU Commission now has 90 working days to finish the in-depth investigation and determine whether to approve the deal. The decision should be made by October 17th. Qualcomm expects to tie up the deal before the end of the year.
Earlier this year Qualcomm has been given a green light to acquire the Dutch company by the US antitrust without demanding concessions. If the EU Commission concludes not to green light the deal, Qualcomm may be fined.