China's Antitrust-Merger Authority Handling of the Google-Motorola Deal

China's Antitrust-Merger Authority Handling of the Google-Motorola Deal

Excerpt:

This past February the US Department of Justice ("DOJ") and European Commission ("Commission") cleared Google Inc.'s acquisition of Motorola Mobility Holdings Inc. without any conditions. In contrast, on May 19, 2012 the Chinese Ministry of Commerce ("MOFCOM") approved the acquisition subject to what some observers believe were over-cautious conditions linked to a lack of experience and institutional resources.

Google Inc. is a provider of internet search and online advertising services as well as the developer of an open source (free of charge) mobile operating system called Android. Motorola Mobility Holdings Inc. manufactures smartphones and computer tablets, and owns approximately 17,000 issued patents and 6,800 applications, including standard essential patents ("SEPs"). In general, SEP's are important in terms of implementing certain telecommunication standards such as 3G or 4G/LTE and WiFi and WiMax in smartphones.

MOFCOM determined that Google's acquisition of Motorola had the effect of eliminating or restricting competition in the markets of operating systems and patents, but approved the acquisition with three conditions:

  • Google must continue to distribute Android, its mobile operating system, without any charges and under an open source license for the next five years;
  • For the next five years Google must treat all original equipment manufacturers in a non-discriminatory manner with respect to the Android platform; and
  • After the acquisition, Google's commitments to license Motorola's patents should continue to comply with the existing fair, reasonable and nondiscriminatory ("FRAND") terms of the standard setting organizations.
  • Google was also required to appoint an independent party to monitor its activities with regard to these three conditions. The monitoring for the first two conditions will be for the next five years and can be waived if the market changes. If Google loses control over Motorola, the second condition will become null and void. The monitoring of the third condition is indefinite.

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