European Commission launch investigation into acquisition of NXP by Qualcomm

The European Commission has opened an in-depth investigation to assess the proposed acquisition of NXP by Qualcomm under the EU Merger Regulation. The Commission has concerns that the transaction could lead to higher prices, less choice and reduced innovation in the semiconductor industry.

Commissioner Margrethe Vestager, in charge of competition policy, said: “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. With this investigation, we want to ensure that consumers will continue to benefit from secure and innovative products at competitive prices.”

NXP and Qualcomm are two of the leading players in the semiconductor industry. The Commission is concerned that the transaction would reduce 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”. It also wants to ensure that the deal would not result in rival suppliers being excluded from this market. There are also concerns with Qualcomm appropriating NXP’s intellectual property.

The transaction was notified to the Commission on 28 April 2017. The Commission now has 90 working days, until 17 October 2017, to take a decision. The opening of an in-depth investigation does not prejudge the outcome of the investigation.

Background

Qualcomm is a leading semiconductors company, which develops and supplies integrated circuits for mobile devices, notably cellular baseband chips. Qualcomm also licenses the rights to its intellectual property portfolio, including rights to patents which are essential to the implementation within wireless production of cellular communication standards.

NXP Semiconductors manufactures and sells different categories of semiconductors, including semiconductors for the automotive sector and semiconductors for the mobile device sector, notably, NFC solutions.

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