19 January 2018
Reporter: Barney Dixon

Qualcomm NXP merger approved

The European Commission has approved Qualcomm’s acquisition of NXP, subject to full compliance with a series of commitments made by Qualcomm.

The commission launched the investigation under the EU Merger Regulation over concerns that the deal could lead to higher prices, less choice and reduced innovation in the semiconductor industry.

Qualcomm and NXP hold significant shares of the semiconductor industry and significant intellectual property portfolios related to near-field communication (NFC) technology.

The commission was concerned that the merged entity would make it more difficult for other suppliers to access NXP’s MIFARE technology by raising the licensing royalties or by ceasing to licence MIFARE altogether.

It also raised concerns over the combined intellectual property portfolios of the merged entity, which would have increased its bargaining power and allowed it to charge higher royalties for NFC patents.

According to the commission, Qualcomm committed to offering licences to NXP’s MIFARE technology and trademarks for an eight year period, on terms that are “at least as advantageous as those available today”.

Qualcomm also offered to not acquire NXP’s standard essential NFC patents and certain non-standard essential NFC patents. NXP will transfer these to a third party, which would be “bound to grant worldwide royalty-free licences to these patents for three years”.

As part of the merger, Qualcomm would still acquire other NXP non-standard essential NFC patents but it committed, for as long as it owns these patents, to not “enforce its rights against other companies and to grant worldwide royalty-free licenses to these patents”.

The commission said that provided these commitments were adhered to, there were no more competition concerns.

In 2016, Qualcomm was hit with a $975 million anti-trust fine in China for charging royalties on its standard-essential patents (SEPs).

Inventions considered essential as an industry standard must be available to licence on fair, reasonable and non-discriminatory terms.

Qualcomm was then hit in 2017 with a $853.4 million fine by the Korea Fair Trade Commission for violating anti-trust laws, which was again related to the abuse of its SEPs.

Qualcomm also saw a lawsuit from the US Federal Trade Commission in 2017, which claimed the semiconductor company had engaged in “exclusionary conduct that taxes its competitors’ baseband processor sales, reduces competitors’ ability and incentive to innovate, and raises prices paid by consumers for cell phones and tablets”.

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