Qualcomm just cannot catch a break lately.
The European Commission has initiated an “in-depth” probe into the U.S. chipmaker’s proposed $47 billion acquisition of Netherlands-based NXP Semiconductors to assess concerns that the deal could raise prices and result in less choice and innovation in the market.
In a Friday press release, the EC noted the transaction would “combine two of the leading players in the semiconductor industry.” The Commission said an initial market review raised several potential issues that could stem from the deal, including the possibility that the merged entity “would have the ability and incentive to exclude their rival suppliers from these (baseband chipset, near-field communication, and secure elements) markets through practices such as bundling or tying.” Additionally, the EC said the deal could impact the future development of the connected car market, and would give the combined company the ability to modify NXP’s current patent licensing practices, especially in relation to NFC technology. On the latter point, the Commission said it will investigate whether such conduct could lead to anticompetitive effects, such as increased royalties for customers and/or exclusion of competitors.
“We use our electronic devices every day – mobile phones or tablets. As semiconductors are used in practically every electronic device, we are dependent on them in those devices,” Commission Competition Chief Margrethe Vestager commented. “With this investigation, we want to ensure that consumers will continue to benefit from secure and innovative products at competitive prices.”
The Commission said it will make a decision within 90 working days – or by October 17 – on the matter. The opening of an in-depth investigation doesn’t prejudge the outcome of the probe, the EC noted.
Qualcomm in a statement indicated the “acquisition is complementary, and driven by the belief that the combined efforts of the two companies will produce even greater innovation than they would alone.”
“This significant investment by Qualcomm will help our industry partners in the automotive, IoT, and security sectors advance their digital transformation and further the digitization of industries worldwide,” the company noted. “Qualcomm is confident that it can address the concerns raised by the European Commission and intends to continue working with the Commission and other regulators to secure clearance. Qualcomm continues to expect this transaction to close by the end of 2017.”
The investigation follows a report from Reuters that Qualcomm was hoping the deal would slide through European regulatory review without concessions.
But the probe also comes in the context of Qualcomm’s ongoing legal battles with tech giant Apple and the U.S. Federal Trade Commission over its patent licensing practices. Both have accused Qualcomm of using its dominant market position to overcharge for patent royalties, claims Qualcomm has called “baseless.” More on those cases here and here.
Filed Under: Industry regulations