Antitrust Law Daily Wrap Up, TOP STORY: FTC conditionally approves combination of semiconductor makers, (Aug 25, 2016)

By Jeffrey May, J.D.

In order to resolve FTC competition concerns over the combination of two suppliers of semiconductor products, ON Semiconductor Corporation has agreed to divest its ignition insulated-gate bipolar transistors (IGBT) business under the terms of a proposed consent order. Ignition IGBTs are semiconductors that serve as electronic switches in the ignition systems of gasoline engine vehicles. The divestiture would resolve concerns that ON Semiconductor’s proposed acquisition of Fairchild Semiconductor International, Inc. would reduce competition in the worldwide market for ignition IGBTs by combining the two largest players in that market, the agency announced today (In the Matter of ON Semiconductor Corp., FTC File No. 161-0061).

ON Semiconductor’s tender offer to acquire all of the outstanding shares of common stock of Fairchild for approximately $2.4 billion was announced on November 18, 2015, and Fairchild’s board reaffirmed its commitment to the deal in February of this year. Fairchild had also received an unsolicited proposal from China Resources Microelectronics Limited and Hua Capital Management Co., Ltd. to acquire the firm.

According to the FTC complaint, the merged company would have a combined share of over 60 percent in the worldwide market for ignition IGBTs. Without a divestiture, it was likely that the proposed merger would have substantially lessened competition in the worldwide market, resulting in higher prices and reduced innovation, it was alleged.

Under the terms of the proposed FTC consent order, ON Semiconductor has agreed to divest its assets to Littelfuse, Inc. The divestiture will include design files and intellectual property that Littelfuse needs to manufacture ON Semiconductor’s product. ON Semiconductor must also facilitate the transfer of its customer relationships to Littelfuse, and supply ignition IGBTs for Littelfuse to sell to customers while the firm sets up its manufacturing operations, according to the FTC.

Attorneys: Jeff Jaeckel (Morrison & Foerster LLP) for ON Semiconductor Corp.

Companies: ON Semiconductor Corp.; Fairchild Semiconductor International, Inc.; Littelfuse, Inc.; China Resources Microelectronics Limited; Hua Capital Management Co., Ltd.

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