The European Commission clears Intel's proposed acquisition of McAfee subject to conditions
Date: Thu, 01/27/2011 - 12:43
The European Commission has approved under the EU Merger Regulation the proposed acquisition of McAfee, a vendor of information technology security, by Intel, both of the US
The approval is conditional upon a set of commitments ensuring fair competition between the parties and their competitors in the field of computer security, a growing concern due to the exponential rise in the number of malware such as viruses. The Commission was concerned that rival IT security products could be excluded from the marketplace given Intel's strong presence in the world markets for computer chips and chipsets. In particular, the Commission worried about the high likelihood that the merged entity would embed its own security solutions into its chips and chipsets. To alleviate those concerns, Intel committed to ensuring the interoperability of the merged entity's products with those of competitors. While the case raised technically complex issues, a conditional clearance decision could be achieved at the end of the preliminary first phase investigation thanks to the good cooperation of Intel.
"The commitments submitted by Intel strike the right balance, as they allow preserving both competition and the beneficial effects of the merger. These changes will ensure that vigorous competition is maintained and that consumers get the best result in terms of price, choice and quality of the IT security products," said Commission Vice-President in charge of competition policy Joaquín Almunia.
Intel is the leading manufacturer of central processing units ("CPUs"), the core chip of a computer, and chipsets, which are used in industries such as computing and communications, and are among the most important components of computers. Intel also develops platforms of digital computing technologies, which combine various types of hardware and software.
McAfee is a security technology company active in the design and development of security products and services focused on ensuring that internet connected devices are protected from malicious content.
Intel and McAfee are active in neighbouring and rather complementary products markets. The merger's effects, therefore, should not be measured in terms of overlaps of products and services, but rather in terms of conglomerate effects. In addition, security solutions vendors need, inter alia, access to specific information regarding CPUs to be able to develop new solutions.
The Commission's investigation identified serious competition concerns regarding the possible bundling of CPUs and chipsets on the one hand with McAfee's security solutions, on the other hand.
In particular, the Commission was concerned that, as a result of the proposed transaction as initially notified, other companies' security solutions might have suffered from a lack of interoperability with Intel CPUs and chipsets or from a technical tying between the latter and McAfee’s security solutions. The Commission was also concerned about possible effects on Intel’s competitors if McAfee solutions were no longer compatible with non-Intel CPUs and chipsets.
In order to address the Commission's concerns, Intel committed, among other things, to ensure that vendors of rival security solutions will have access to all necessary information to use functionalities of Intel's CPUs and chipsets in the same way as those functionalities used by McAfee. Intel also committed not to actively impede competitors' security solutions from running on Intel CPUs or chipsets. Finally, Intel will avoid hampering the operation of McAfee's security solutions when running on personal computers containing CPUs or chipsets sold by Intel's competitors.
The Commission concluded that the commitments were suitable to remove the competition concerns identified while preserving the efficiencies of the merger, because they are designed to maintain interoperability between the merged entity's products and those of their competitors, thereby ensuring competition on an equal footing between the parties and their competitors. The remedies will be monitored by a trustee.
In the context of the review of the Intel/McAfee merger, the Commission cooperated with the U.S. Federal Trade Commission. The cooperation with this competition authority has been close and helpful throughout the review.
The transaction was notified to the Commission on 29 November 2010.