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On December 9, 2024, China's State Administration for Market Regulation("SAMR") issued a public notice announcing that it would initiate a case to investigate NVIDIA's suspected monopolization due to alleged violations of the Anti-Monopoly Law of China and the "Announcement of the Decision made by SAMR on the Anti-Monopoly Review of the Case of Approving the Acquisition of the Shareholding of Mellanox Technology Co. by Nvidia Inc. under the Attachment of Restrictive Conditions" (Announcement of SAMR (2020) No. 16).
NVIDIA Corporation is a semiconductor company headquartered in Santa Clara, U.S.A. Founded in 1993 and listed in January 1999 on the NASDAQ exchange, NVIDIA is one of the world's leading manufacturers of graphics processing units (GPUs), which play an important role in high-performance computing, data centers, artificial intelligence, and gaming.
Mellanox Technologies, Ltd. is an Israel-based technology company founded in 1999 and also got listed on the NASDAQ exchange. Mellanox focuses on the research, development, production and sales of network interconnection products. Its products are important in the fields of data centers, cloud computing, and high-performance computing.
This investigation traces back to the acquisition of Mellanox initiated by NVIDIA in 2019. On March 10, 2019, NVIDIA and Mellanox entered into an acquisition agreement, whereby NVIDIA intends to acquire all of the shares of Mellanox. This transaction aims to enhance NVIDIA's competitiveness in the areas of data centers, high-performance computing, and artificial intelligence by integrating the technology and market resources of the two companies.
However, due to the vertical relationship between the two companies in the commodity markets of data center servers and general Ethernet adapters and the adjacent relationship between the commodity markets of graphics processor gas pedals (hereinafter referred to as "GPU gas pedals") and dedicated network interconnection equipment, and GPU gas pedals and high-speed Ethernet adapters, and because both groups are global suppliers, there is a compliance risk of monopoly of concentration of undertakings. Therefore, on April 24 of the same year, NVIDIA made an antitrust declaration of undertaking concentration for the acquisition of equity interest in Mellanox to the SAMR, and on August 15, SAMR filed a case and conducted a preliminary examination of the declaration of operator concentration after NVIDIA supplemented the relevant declaration materials according to the requirements.
After the systematic review, SAMR believed that the concentration has or may have the effect of excluding or restricting competition in both Chinese and global markets for GPU gas pedals, private network interconnection equipment and high-speed Ethernet adapters. Based on this judgment, SAMR conducted several rounds of discussions with the filing party,NVIDIA, on how to reduce the adverse impact of the concentration on competition, etc.
In April 2020, NVIDIA submitted the "Commitment Proposal with Restrictive Conditions Regarding the Acquisition of the Equity Interests in Mellanox Technology Co. by NVIDIA," and, ultimately, on April 16, 2020, the SAMR issued a public notice announcing that it was approving this undertakings' concentration with restrictive conditions.
In the submitted proposals, NVIDIA has made bunch of commitments, including not to force tie-in sales in any way or attach any other unreasonable trading conditions when selling NVIDIA GPU gas pedals and Mellanox high-speed network interconnect devices to the Chinese market; not to impede or restrict customers from purchasing or using the above products individually; not to discriminate against customers purchasing the above products individually in terms of the service level, price, and software functions, etc.; continue to supply NVIDIA GPU gas pedals, Mellanox high-speed network interconnection devices and related software and accessories to the Chinese market according to the principles of fairness, reasonableness and non-discrimination; continue to maintain the fulfillment of open-source commitments for the peer-to-peer communication software and aggregated communication software of the Mellanox high-speed network interconnection devices, etc.. However, currently, the SAMR is of the opinion that NVIDIA has not fulfilled the obligations due to it promised in the proposal.Consequently, according to the relevant provisions of the Anti-monopoly Law, SAMR initiated an anti-monopoly investigation into the company.
At present, the investigation has just been launched, and the specific results of the investigation will be further announced.
