Qualcomm drops patents to gain European Commission acquisition approval
Qualcomm has agreed not to obtain all of NXP Semiconductors’ patents in its planned acquisition of the company, in a bid to secure approval from the European Commission.
Commissioner Margrethe Vestager announced the approval, which follows an in-depth review of Qualcomm’s proposal, on Thursday, January 18.
The proposed acquisition was announced by Qualcomm in April 2017.
In June, the European Commission launched an investigation into the proposed $47 billion acquisition, WIPR reported, due to concerns that the transaction could lead to higher prices, less choice, and reduced innovation in the semiconductor industry.
When launching the investigation, the Commission noted that the companies “own a significant amount of IP relevant to smart phone manufacturers”.
This includes patents relating to near-field communication (NFC) chips, which are used to make secure payments on smart phones by enabling short-range connectivity.
After investigation, the Commission said that the resulting entity could make it difficult for other suppliers to access some of NXP’s technology, and that the merged entity would have had the ability to decrease the interoperability of its chips with rival products.
The combination of two companies with “significant IP portfolios related to NFC technology” could also increase the entity’s bargaining power in royalty agreements, it continued.
Qualcomm has agreed not to acquire NXP’s standard essential patents covering the NFC technology, and the patents will be transferred to a third party. The third party will be bound to grant royalty-free licenses for three years.
Qualcomm will still acquire other non-standard essential NFC patents, and has committed to grant royalty-free licenses to them.
The Commission’s approval is conditional on full compliance with the terms.
Vestager said the terms agreed upon mean that the acquisition “will not prevent consumers from continuing to enjoy the benefits” of innovative technologies at competitive prices.
As well as gaining clearance from the European Commission, Qualcomm also received approval from the Korea Fair Trade Commission. Permission has not yet been granted by China, according to Reuters.
Steve Mollenkopf, CEO of Qualcomm, said he is optimistic that China will "expeditiously grant its clearance". He added that acquiring NXP will boost the company's portfolio by expanding Qualcomm's reach in the automotive, internet of things, security, and networking industries.
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