BRUSSELS, BELGIUM (BNO NEWS) — Internet giant Google, Inc. on Monday received approval from the European Union (EU) to acquire telecommunications company Motorola.
The European Commission cleared under the EU Merger Regulation the proposed acquisition of smartphones and tablets developer Motorola Mobility by Google, the world’s largest internet search and search advertising company and developer of Android, which is one of the most popular mobile operating systems.
According to the Commission, the transaction was approved “mainly because it would not significantly modify the market situation in respect of operating systems and patents for these devices.”
“We have approved the acquisition of Motorola Mobility by Google because, upon careful examination, this transaction does not itself raise competition issues,” said Joaquín Almunia, Commission Vice President in charge of competition policy. “Of course, the Commission will continue to keep a close eye on the behavior of all market players in the sector, particularly the increasingly strategic use of patents.”
Meanwhile, Don Harrison, Google’s Vice President and Deputy General Counsel, expressed satisfaction following the EU’s approval.
“We’re happy that today the European Commission approved our proposed acquisition of Motorola Mobility, which we announced in August,” Harrison stated through the company’s official blog. “This is an important milestone in the approval process and it moves us closer to closing the deal.”
Noting that the transaction is now waiting for decisions from other jurisdictions, Harrison underlined that the combination of Google and Motorola Mobility will help “supercharge” Android and enhance competition, as well as offer consumers “faster innovation, greater choice and wonderful user experiences.”
The estimated $ 12.5 billion transaction was first notified to the European Commission on November 25, 2011, prompting a review which has been carried out in cooperation with a number of competition authorities and in particular with the U.S. Department of Justice (DOJ). The DOJ, meanwhile, is expected to make its decision regarding the transaction later this week.
In its acquisition, Google is looking to take advantage of Motorola’s 17,000 patents, as well as its 7,500 pending patent applications.
As all smartphones and tablets need an operating system, the Commission’s investigation considered whether Google would be likely to prevent Motorola’s competitors from using Google’s Android operating system and showed Android helps to drive the spread of Google’s other services.
Consequently, given that Google’s core business model is to push its online and mobile services and software to the widest possible audience, the Commission stated, it is unlikely that Google would restrict the use of Android solely to Motorola, a minor player in the European Economic Area (EEA) as compared to operators such as Samsung and HTC.
In addition, all smartphones also need to adhere to certain telecommunications standards such as 3G or 4G/LTE. Motorola, as some other market participants, holds patents that are essential for these standards to operate.
Access to such “standard essential” patents is therefore crucial for players on the smartphone market. However, the Commission said it concluded that the proposed transaction would not significantly change the existing market situation in this respect.
Finally, the Commission also examined whether Google would be in a position to use Motorola’s standard essential patents to obtain preferential treatment for its services, including search and advertising.
The Commission found that Google already has many ways in which to incentivise customers to take up its services and that the acquisition of Motorola would not materially change this, concluding that the transaction would not significantly impede effective competition in the EEA or any substantial part of it.
The European Commission has the duty to assess mergers and acquisitions involving companies with a turnover above certain thresholds and to prevent concentrations that would significantly impede effective competition in the EEA or any substantial part of it.
The vast majority of mergers do not pose competition problems and are cleared after a routine review. From the moment a transaction is notified, the Commission generally has a total of 25 working days to decide whether to grant approval or to start an in-depth investigation.