ACM supports European Commission’s investigation into the acquisition of Autotalks by Qualcomm
The European Commission will investigate the acquisition of Autotalks by Qualcomm. Various European competition authorities, including the Netherlands Authority for Consumers and Markets (ACM), had requested the European Commission to do so. Autotalks and Qualcomm both manufacture microchips that are used in driving-assistance systems in cars that improve traffic safety. Such driving-assistance systems make cars, for example, automatically brake if another car comes too close.
Martijn Snoep, Chairman of the Board of ACM, explains: “Autotalks is a small company with low turnover, but it does have highly promising technologies and products for further developing traffic-safety systems in vehicles. As a result of the acquisition, Qualcomm can become so dominant in this area that they can easily push competitors and alternative systems out of the market.”
Qualcomm is worldwide one of the largest manufacturers of microchips for various applications, including driving-assistance systems. Two different technical standards currently exist for microchips in driving-assistance systems. Autotalks is the only company that manufactures microchips that are compatible with both those standards. Autotalks also supplies microchips to competitor companies that develop driving-assistance systems, and thus directly and indirectly supplies to car manufacturers.
ACM has concerns that this acquisition may be harmful to competition, and may lead to higher prices, reduced quality, or less innovation for traffic-safety systems in vehicles. Since this acquisition has an impact across the entire European Union, various countries have requested the European Commission to investigate this acquisition.
Why is it important that this acquisition is investigated?
Large companies regularly buy up small, often innovative companies. This can have positive effects, for example, because the larger company is able to manufacture and bring to market innovative products faster. However, there are also risks associated with such practices, as they can eliminate future competition of these smaller companies. Subsequently, it may be easier for larger companies to drive up prices or reduce quality. It can also be harmful to innovation, because new developments that are spearheaded by these small companies will take place either later or not even at all. ACM therefore finds it important that the consequences of this acquisition will be investigated.
Why will the European Commission launch this investigation?
It is not mandatory to notify competition authorities of each and every merger or acquisition. Only if the merging companies meet certain turnover thresholds will they be required to notify regulators of their merger or acquisition plans before going through with them. In this particular case, the turnover thresholds set by ACM as well as those set by the European Commission have not been met. However, if a member state has serious concerns, and there is no European notification obligation, European countries will then have the opportunity to request the European Commission to launch an investigation anyway.