Antitrust Law Daily Wrap Up, ACQUISITIONS & MERGERS NEWS: NXP Semiconductors to divest RF power amplifier assets as condition of Freescale Semiconductor acquisition, (Nov 30, 2015)

By Linda O’Brien, J.D., LL.M.

NXP Semiconductors N.A. has agreed to sell its RF power amplifier assets in order to settle FTC charges that its proposed $11.8 billion acquisition of Freescale Semiconductor Ltd. is anticompetitive, the agency announced on November 25. The Netherlands-based NXP and the Austin, Texas-based Freescale develop and manufacture semiconductor products for a wide range of electronic systems (In re Matter of NXP Semiconductors N.A., File No. 151-0090).

According to the FTC complaint, the worldwide market for RF power amplifiers—semiconductors that amplify radio signals used to transmit information between electronic devices such as cellular base stations and mobile phones—is extremely concentrated, with Freescale and NXP supplying more than 60 percent, and Infineon Technologies AG as the only other significant competitor. Without a divestiture, it is likely that the proposed merger would substantially lessen competition in the worldwide market for RF power amplifiers, likely resulting in higher prices and reduced innovation.

The proposed consent order preserves competition by requiring NXP to divest all its assets that are used primarily for manufacturing, research, and development of RF power amplifiers to the Chinese private equity firm Jianguang Asset Management Co. Ltd. These assets include a manufacturing facility in the Philippines, a building in the Netherlands to house management and some testing labs, as well as all patents and technologies used exclusively or predominantly for the RF power amplifier business and a royalty-free license to use all other NXP patents and technologies required by that business. The divestiture also includes all of NXP’s RF power amplifier employees and managers.

The divestiture agreement provides Jianguang Asset Management with the assets it needs to compete effectively in the RF power amplifier market and to replace the competition that otherwise would have been lost through the proposed acquisition. NXP must refrain for two years from soliciting its former employees and managers. A monitor will oversee NXP's compliance with the obligations set forth in the order. If NXP does not fully comply, the Commission may appoint a divestiture trustee to ensure that the terms of the order are met.

Throughout the investigation, FTC staff cooperated with the antitrust agencies in the European Union, Japan, and Korea, including on the analysis of the proposed transaction and potential remedies, to reach compatible approaches on an international scale.

The FTC will publish in the Federal Register the consent agreement package, which will be subject to public comment through December 28. Comments may be filed electronically or in paper form by following the instructions in the “Supplementary Information” section of the Federal Register notice.

Companies: NXP Semiconductors N.V.; Freescale Semiconductor Ltd.

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