Antitrust Law Daily Wrap Up, ANTITRUST NEWS: FTC Seeks to Stop Integrated Device Technology’s Acquisition of PLX Technology, Inc., (Dec 19, 2012)
Organizations Mentioned:Integrated Device Technology, Inc. | PLX Technology, Inc.
By Tobias J. Gillett, J.D., LLM.
The FTC has announced that it has issued an administrative complaint seeking to prevent Integrated Device Technology (IDT)’s proposed $330 million acquisition of PLX Technology, Inc. (PLX), and has authorized its staff to seek a preliminary injunction to stop the transaction pending a full administrative trial. The FTC’s complaint alleges that the combined company would possess a near-monopoly on the production of PCIe switches, a type of integrated circuit.
According to the FTC, IDT, a San Jose, California-based manufacturer of a variety of semiconductor products, currently holds the second position in the PCIe switch market, after PLX, a Sunnyvale, California-based producer of a range of integrated circuits. PCIe switches connect components in computers and other modern electronics. The proposed transaction would allegedly grant the combined entity a market share of over 85 percent in the PCIe switch market.
“PCIe switches are important components in many computing, communications and consumer products,” said FTC Bureau of Competition Director Richard Feinstein in a press release. “The combination of IDT and PLX would hurt competition and lead to higher switch prices, lower innovation in the marketplace, and reduced customer service.”
According to the FTC, eliminating the competition between PLX and IDT would lead to higher prices, less innovative products, and reduced customer service. The FTC referred to IDT’s introduction of spread spectrum clocking, a technology that the FTC alleges PLX adopted in order to continue to compete with IDT, and to the two firms’ status as the only companies producing third generation PCIe switches, as examples of the kind of competition over innovation that would be eliminated through the combination.
IDT and PLX have issued statements expressing their disappointment with the FTC’s decision and their intent to consider their possible responses.
“We are truly disappointed and strongly disagree with the complaint issued by the FTC as we believe the merger would accelerate innovation and decrease costs,” said David Raun, interim president and CEO of PLX, in a press release. “We are evaluating this move by the FTC and reviewing our options with IDT.”
News: Antitrust FederalTradeCommissionNews