IT Home December 22 news, today the State Administration for Market Regulation anti-monopoly bureau official website released the "State Administration for Market Regulation on the additional restrictive conditions to approve SK Hynix Co., Ltd. acquisition of part of the intel company part of the business case anti-monopoly review decision", the announcement said that the State Administration for Market Regulation received SK Hynix Co., Ltd. acquisition of part of the intel company part of the business of the business concentration anti-monopoly declaration. After review, the State Administration for Market Regulation decided to attach restrictive conditions to approve the concentration of undertakings.
It House comes with the full text of the announcement:
The State Administration for Market Regulation received the antitrust declaration for the concentration of undertakings in the case of SK Hynix Co., Ltd. (hereinafter referred to as SK Hynix) for the acquisition of part of Intel Corporation's business (hereinafter referred to as the target business) (hereinafter referred to as the case). After review, the State Administration for Market Regulation decided to attach restrictive conditions to approve the concentration of undertakings. In accordance with Article 30 of the Anti-Monopoly Law of the People's Republic of China (hereinafter referred to as the Anti-Monopoly Law), the following is hereby announced:
1. Procedures for filing and reviewing cases
On December 15, 2020, the State Administration for Market Regulation received the anti-monopoly declaration for concentration of undertakings in this case. After review, the State Administration for Market Regulation found that the declaration materials were incomplete and required the declaring party to supplement them. On 22 March 2021, the State Administration for Market Regulation confirmed that the supplemented filing materials complied with Article 23 of the Anti-Monopoly Law, filed a case against the concentration of undertakings and began a preliminary review. On 21 April 2021, the State Administration for Market Regulation (SAMR) decided to conduct a further review of this concentration of undertakings. On July 20, 2021, with the consent of the reporting party, the State Administration for Market Regulation decided to extend the period for further review. On September 15, 2021, before the expiration of the further review extension phase, the reporting party applied to withdraw the case and obtained the consent of the State Administration for Market Regulation. On September 18, 2021, the State Administration for Market Regulation filed a case review of the declarant's re-declaration. The case is currently under further review and is due january 15, 2022. The State Administration for Market Regulation believes that this concentration has or may have the effect of eliminating or restricting competition in the global and Chinese PCIe enterprise SSD market and the SATA enterprise SSD market. During the review process, the State Administration for Market Regulation solicited the opinions of relevant government departments, industry associations, competitors and downstream customers, learned about the relevant market definition, market participants, market structure, industry characteristics and other aspects, and reviewed the authenticity, completeness and accuracy of the documents and materials submitted by the declaring party.
II. Basic circumstances of the case
Acquirer: SK Hynix was incorporated in South Korea in 1983 and listed on the Korea Stock Exchange in 1996, with a dispersed shareholding and no ultimate controller, mainly engaged in memory, solid-state drives and image sensor related businesses.
Acquired: The target business is part of Intel's storage business, and the ultimate controller is Intel Corporation, mainly engaged in NAND flash memory and solid-state drive related businesses.
On October 19, 2020, the parties to the transaction signed an agreement. Once centralized, SK Hynix takes sole control of the target business.
3. Related markets
(1) Relevant commodity markets.
SK Hynix and target businesses were reviewed to overlap horizontally in the PCIe enterprise SSD market, SATA enterprise SSD, customer SSD, and NAND flash markets. At the same time, SK Hynix is also engaged in the upstream DRAM business, and there is a vertical relationship with downstream SSDs, while NAND flash memory also has a vertical relationship with SSDs.
1. Customer-class SSD. An SSD is a hard disk based on integrated circuit components, consisting mainly of flash memory, a controller, and a power management chip. Depending on the end application, SSDs can be divided into enterprise-class SSDs and customer-class SSDs. Enterprise-class SSDs offer higher capacity density, faster data read and write speeds, and lower risk of errors, and are primarily used in high-load applications such as data centers. Customer-class SSDs are mainly used in low-load applications such as personal computers. The performance of the two is different, and there is a lack of substitution relationship between them. This case defines customer-level SSDs as separate markets for related commodities.
2. Enterprise-class SSD. Depending on the interface, enterprise SSDs are divided into PCIe Enterprise SSDs, SAS Enterprise SSDs and SATA Enterprise SSDs. The read and write speeds of SSDs with different interfaces are different, and the performance performance in actual applications varies greatly, and there is a lack of substitution relationship between them. This case defines PCIe enterprise SSDs and SATA enterprise SSDs as independent related commodity markets.
3. NAND Flash. Flash memory is a non-volatile memory that preserves stored data in the event of a power outage. According to the design structure, flash memory is mainly divided into NAND flash memory and NOR flash memory. The storage cells in NAND Flash are connected in series for low-cost, high-density, high-speed programming or erasure data storage applications such as solid-state drives. The storage cells in nor flash memory are connected in parallel for low-density, low-capacity, high-read code storage applications such as program storage in embedded systems. There are differences in characteristics and uses between the two, and there is a lack of substitution relationship between them. This case defines NAND flash memory as a separate market for related commodities.
4.DRAM。 RAM is a volatile memory where data is lost in the event of a power outage. Depending on how the data is stored, RAM is mainly divided into SRAM and DRAM. SRAM uses transistors to store data and is typically used in applications where speed is critical. DRAM mainly uses capacitors to store data, usually used in computer memory, graphics cards and other electronic products. The price and speed of the two are different, and there is a lack of substitution relationship between them. This case defines DRAM as a separate market for related commodities.
(2) Relevant regional markets.
The relevant goods involved in this case are supplied and procured globally, suppliers compete globally, there is no significant price difference between the products in different countries, and the proportion of product freight to the final selling price is low, and there are no significant cross-border trade barriers. Therefore, the relevant regional markets of the above commodities are defined as global, and the situation of the domestic market in China is also examined.
Fourth, competition analysis
According to Article 27 of the Anti-Monopoly Law, the State Administration for Market Regulation has an in-depth analysis of the impact of the concentration on market competition from the aspects of the market share of the participating business operators in the relevant markets and their control over the market, the market concentration of the relevant markets, the impact of the concentration on downstream user enterprises and other relevant business operators, and believes that this concentration has or may have the effect of eliminating or restricting competition in the global and Chinese PCIe enterprise-level SSD market and the SATA enterprise-level SSD market.
(1) The transaction will increase the market concentration of SATA's enterprise-level SSDs and enhance the market control of the centralized entity.
In 2020, in the global SATA enterprise SSD market, SK Hynix and the target business combined to have a market share of 30%-35%. Before trading, the Heffendaal Index (hereinafter referred to as HHI) was 2544, and the market concentration was relatively high. The post-centralized HHI is 2851, in increments of 307. In the SATA enterprise SSD market in China, the combined market share of the target business and SK Hynix is 55%-60%. Before trading, the HHI was 4139 and the market was highly concentrated. After trading 4329, increment 190. Trading will further increase market concentration and weaken market competition. At the same time, the transaction will integrate the patents and unique know-how of both parties to eliminate SK Hynix' close competitors in the global and domestic markets, reduce the competitive constraints they face, and further enhance the market control of the centralized entity.
(2) The transaction will increase the concentration of the PCIe enterprise SSD market and enhance the control of the centralized entity.
In 2020, in the global PCIe enterprise SSD market, SK Hynix and the target business combined to have a market share of 40%-45%. Before trading, the HHI was 2775 and the market concentration was high. After trading 3456, increment 681. In the PCIe enterprise SSD market in China, the target business and SK Hynix market share are combined to 50%-55%. Trading will further increase market concentration and weaken market competition. At the same time, the transaction eliminates SK Hynix' close competitors in the global and domestic markets, reduces the competitive constraints it faces, and further enhances the control of the concentrated entity in the domestic market in China.
(3) Concentration may enhance the motivation and ability of relevant market competitors to coordinate prices.
After the completion of the transaction, the main competitors in the SATA enterprise SSD market were reduced from 4 to 3, with a total global market share of more than 90% ;P the main competitors in the CIe enterprise SSD market decreased from 3 to 2, and the total global market share exceeded 80%. The SSD market is technologically mature, the price is relatively transparent, and customers mainly purchase through bidding. In the case of a reduction in the number of major competitors, the cost of communication and coordination between competitors through explicit or implicit means is reduced, and it is easier for operators to speculate on the pricing strategies of other competitors through the winning bid results. At the same time, the profit margin of coordinated price behavior in the SSD market is larger, the behavior that deviates from coordination is easier to find and constrained, and the motivation and ability to coordinate prices among competitors are further improved.
(4) The barriers to market entry are high, and it is difficult to emerge new effective competitors in the short term.
Enterprise-class SSDs are mainly used for data center servers, and customers have high requirements for product quality and stability. New entrants often face obstacles such as capital and customer certification at the same time, and it is difficult for new competitors to form effective competitive constraints on the centralized entities in the short term.
5. Negotiations with restrictive conditions attached
During the review process, the State Administration for Market Regulation promptly informed the reporting party of the review opinions that had or may have the effect of eliminating or restricting competition in this case, and held several rounds of discussions with the reporting party on how to reduce the adverse impact of this concentration of undertakings on competition. With regard to the restrictive condition commitments submitted by the reporting party, the State Administration for Market Regulation assessed the effectiveness, feasibility and timeliness of the restrictive conditions in accordance with the Interim Provisions on the Review of Concentration of Undertakings.
After assessment, the STATE ADMINISTRATION FOR MARKET SUPERVISION believes that the additional restrictive condition commitment plan submitted by the reporting party on 7 December 2021 (see annex) can reduce the adverse impact of this concentration of undertakings on competition.
6. Review and decision
In view of the fact that the concentration of such operators in the PCIe enterprise SSD and SATA enterprise SSD markets has or may have the effect of eliminating or restricting competition, according to the additional restrictive conditions commitment plan submitted by the reporting party, the State Administration for Market Regulation has decided to attach restrictive conditions to approve this concentration, requiring the centralized entities to perform the following obligations:
(1) PCIe enterprise SSD products and SATA enterprise SSD products shall not be supplied to the domestic market in China at unreasonable prices. The price of PCIe enterprise SSD products and SATA enterprise SSD products sold to the domestic market in China must not be higher than their average price in the 24 months prior to the effective date, provided that the terms of the transaction are comparable.
(b) Continue to expand production of PCIe enterprise SSD products and SATA enterprise SSD products for a period of 5 years from the effective date.
(3) Continue to supply all products to the domestic market in China on the basis of the principles of fairness, reasonableness and non-discrimination.
(4) Customers in the domestic market of China shall not be forced or covertly forced to purchase products exclusively from SK Hynix or any company controlled by SK Hynix; PCIe enterprise SSD products shall not be forced to sell or bundle PCIe enterprise SSD products with other products, and SATA enterprise SSD products and other products shall not be forced to be bundled or bundled.
(v) Help a third-party competitor enter the PCIe enterprise SSD and SATA enterprise SSD markets.
(f) shall not enter into any written or oral agreement, decision or other coordinated act (including implied synergy) with its main competitors in China that excludes or restricts competition in relation to the sales price, production or volume of sales.
In addition to this announcement, the Commitment Scheme of Additional Restrictive Conditions submitted by SK Hynix to the State Administration for Market Regulation on December 7, 2021 is legally binding on SK Hynix, the target business and the centralized entity.
After 5 years from the effective date of the restrictive conditions, the centralized entity may apply to the State Administration for Market Regulation to lift the conditions. The State Administration for Market Regulation will make a decision on whether to terminate the release based on the application and according to the market competition situation. Without the approval of the State Administration for Market Regulation, the entity shall continue to perform the restrictive conditions after the concentration.
The State Administration for Market Regulation has the power to supervise the performance of the above obligations by supervising the trustee or supervising the performance of the centralized entity by itself. If the entity fails to perform or violate the above obligations after the concentration, the State Administration for Market Regulation will deal with it in accordance with the relevant provisions of the Anti-Monopoly Law.
This Decision shall enter into force on the date of the announcement.
![SK Hynix's acquisition of Intel's flash memory business is progressing smoothly AMD's acquisition of Xilinx is not yet available[fig]](data:image/gif;base64,R0lGODlhAQABAIAAAP///wAAACwAAAAAAQABAAACAkQBADs=)