Beijing Puts Strings on Approval for Nvidia’s $6.9 Billion Deal for Isreali Tech Firm

After running a review that lasted almost a year, China’s monopoly watchdog has decided to approve U.S. chipmaking giant Nvidia’s $6.9 billion deal to buy Israeli network-equipment maker Mellanox, though not without demands of its own.

The State Administration for Market Regulation (SAMR) posed seven conditions for the acquisition to proceed on the grounds that the merger of the two market leaders could diminish competition in the domestic and overseas markets for graphic processing units (GPUs), network gear and high-speed Ethernet adapters, the administration said in an announcement (link in Chinese) posted on its website late Thursday.

The SAMR has demanded that Nvidia Corp. and Mellanox Technologies Ltd. refrain from “forced selling” or putting any unreasonable conditions on deals with their customers in the Chinese market, according to the announcement. Two of the seven conditions were confidential.

The conditional approval removes the last roadblock to a deal that Nvidia announced in March 2019. The deal, which has already received regulatory approval from the U.S., the EU and Mexico, is expected to close by the end of this month.

Beijing’s review of the deal took almost a year and required documents to be resubmitted several times, according to SAMR’s announcement. Nvidia filed its initial application on April 24. It agreed to the Chinese government’s conditions almost a year later on April 10.

The regulator is concerned that the merger of the two tech equipment leaders could hurt competition in the hardware market. According to the SAMR, Nvidia controls more than 95% of China’s GPU market and more than 90% globally. Mellanox controls up to 85% of China’s market for private network interconnection equipment and up to 60% of the global market.

The SAMR fears the acquisition will give the two companies more power to negotiate prices with its customers and will also give it opportunities to wipe out effective new competitors in the…

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