EUROPEAN COMMISSION DG Competition CASE M.8306-QUALCOMM / NXP SEMICONDUCTORS (Only the English text is authentic) MERGER PROCEDURE REGULATION (EC) 139/2004 Article 8(2) Regulation (EC) 139/2004 Date: 18/01/2018 This text is made available for information purposes only. A summary of this decision is published in all EU languages in the Official Journal of the European Union. Parts of this text have been edited to ensure that confidential information is not disclosed; those parts are enclosed in square brackets. EUROPEAN COMMISSION Brussels, 18.1.2018 C(2018) 167 final Public Version COMMISSION DECISION of 18.1.2018 declaring a concentration to be compatible with the internal market and the EEA agreement (Case M.8306 – Qualcomm / NXP Semiconductors) (Only the English text is authentic) COMMISSION DECISION of 18.1.2018 declaring a concentration to be compatible with the internal market and the EEA agreement (Case M.8306 – Qualcomm / NXP Semiconductors) (Only the English text is authentic) TABLE OF CONTENTS 1. THE PARTIES ............................................................................................................. 8 2. THE OPERATION AND THE CONCENTRATION ................................................. 9 3. UNION DIMENSION ................................................................................................. 9 4. PROCEDURE .............................................................................................................. 9 5. MARKET DEFINITION ........................................................................................... 11 5.1. Introduction ................................................................................................................ 11 5.2. Product market definition ........................................................................................... 11 5.2.1. Semiconductors for automotive applications ............................................................. 11 5.2.1.1. Notifying Party's views .............................................................................................. 11 5.2.1.2. The results of the market investigation and the Commission's assessment ............... 13 5.2.2. Semiconductors for Internet of Things applications .................................................. 16 5.2.2.1. Notifying Party's views .............................................................................................. 16 5.2.2.2. The results of the market investigation and the Commission's assessment ............... 17 5.2.3. Semiconductors for mobile devices ........................................................................... 18 5.2.3.1. Baseband chipsets ...................................................................................................... 18 A) Notifying Party’s views.............................................................................................. 19 B) The results of the market investigation and the Commission's assessment ............... 21 a) Non-cellular v cellular connectivity ..................................................................................... 21 b) Standalone v integrated baseband chipsets .......................................................................... 22 c) Segmentation by cellular standard ....................................................................................... 23 d) Merchant v captive sales ...................................................................................................... 26 e) Conclusion ............................................................................................................................ 27 5.2.3.2. Near Field Communication/Secure Element technology ........................................... 27 A) NFC chips................................................................................................................... 29 1. Notifying Party’s views.............................................................................................. 29 2. The results of the market investigation and the Commission’s assessment ............... 31 a) Substitutability between NFC and BTLE ............................................................................ 32 b) Substitutability between NFC and QR codes ....................................................................... 33 c) Substitutability between NFC and MST .............................................................................. 34 d) Installed base of POS terminals ........................................................................................... 35 e) Merchant v captive sales ...................................................................................................... 36 f) Conclusion ............................................................................................................................ 36 B) Secure Element ........................................................................................................... 36 1. Notifying Party’s views.............................................................................................. 36 2. The results of the market investigation and the Commission’s assessment ............... 38 2 a) Merchant v captive sales ...................................................................................................... 42 b) Conclusion ........................................................................................................................... 43 C) Combined NFC/SE solutions ..................................................................................... 43 5.2.3.3. Mobile Audio – speech enhancement software and smart amplifiers ........................ 45 A) Speech enhancement software ................................................................................... 45 1. Notifying Party’s views.............................................................................................. 45 2. The results of the market investigation and the Commission's assessment ............... 46 B) Smart amplifiers ......................................................................................................... 46 1. Notifying Party's views .............................................................................................. 46 2. The results of the market investigation and the Commission's assessment ............... 47 5.2.4. Transit service technologies ....................................................................................... 47 5.2.4.1. Notifying Party's views .............................................................................................. 48 5.2.4.2. The results of the market investigation and the Commission's assessment ............... 49 5.2.5. Intellectual Property (SEPs and non-SEPs) ............................................................... 51 5.2.5.1. Notifying Party's views .............................................................................................. 52 5.2.5.2. The results of the market investigation and the Commission's assessment ............... 54 5.3. Geographic market definition .................................................................................... 55 5.3.1. All relevant semiconductor products (automotive semiconductors, IoT semiconductors, baseband chipsets, NFC, SE, and combined NFC/SE chips, smart amplifiers) .................................................................................................................. 55 5.3.1.1. Notifying Party's views .............................................................................................. 55 5.3.1.2. The results of the market investigation and the Commission’s assessment ............... 56 5.3.2. Speech enhancement software ................................................................................... 56 5.3.2.1. Notifying Party's views .............................................................................................. 56 5.3.2.2. The results of the market investigation and the Commission's assessment ............... 56 5.3.3. Transit service technologies ....................................................................................... 57 5.3.3.1. Notifying Party's views .............................................................................................. 57 5.3.3.2. The results of the market investigation and the Commission's assessment ............... 57 5.3.4. Intellectual Property (SEPs and non-SEPs) ............................................................... 57 5.3.4.1. Notifying Party's views .............................................................................................. 57 5.3.4.2. The results of the market investigation and the Commission's assessment ............... 58 6. COMPETITIVE ASSESSEMENT – HORIZONTAL NON-COORDINATED EFFECTS ................................................................................................................... 58 6.1. Analytical framework ................................................................................................. 58 6.2. Semiconductors for automotive applications ............................................................. 60 6.2.1. Introduction ................................................................................................................ 60 6.2.2. Infotainment MPUs .................................................................................................... 60 6.2.2.1. Notifying Party's views .............................................................................................