Concerns Over Competition Restrictions in Three Markets Including Optical and Register-Transfer Level Software
The Korea Fair Trade Commission (KFTC) has given final approval for Synopsys' acquisition of Ansys. However, to prevent unilateral price increases using a dominant market position after the merger, the approval is conditional on the divestiture of certain assets of both Synopsys and Ansys.
On the 20th, the KFTC announced, "We conditionally approve the merger in which Synopsys acquires all shares of Ansys valued at approximately $35 billion (about 50 trillion KRW)."
This merger involves two U.S.-based software companies, Synopsys and Ansys, both of which supply semiconductor chips and other products to domestic companies such as Samsung Electronics and SK Hynix. Synopsys also supplies design IP, standardized components that make up semiconductor chips, to Samsung Electronics, SK Hynix, and others.
The KFTC conditionally approved Synopsys' acquisition of Ansys because it judged that the merger could restrict competition in three markets: register-transfer level power analysis software, optical software, and photonics software.
In these three markets, the combined market shares after the merger would reach 60-80% for register-transfer level power analysis software, 90-100% for optical software, and 55-75% for photonics software, respectively.
The KFTC considered that after this merger, Synopsys and Ansys could use their dominant positions to impose unilateral price increases and unfavorable changes in trading conditions, thereby restricting competition.
Accordingly, the KFTC required the divestiture of all related assets of either Synopsys or Ansys by market. Specifically, in the register-transfer level power analysis software market, Ansys and its affiliates must divest all related assets they hold, while in the optical software and photonics software markets, Synopsys and its affiliates must divest all related assets they hold.
The KFTC stated, "This corrective measure is significant in that it protects competition in software markets essential for designing semiconductor chips and optical and photonics products through the divestiture of assets by Synopsys and Ansys. This prevents potential harm to domestic semiconductor chip companies such as Samsung Electronics and SK Hynix, which are fiercely competing internationally amid the rise of artificial intelligence (AI) semiconductors and supply chain restructuring."
In designing the details of this asset divestiture measure, the KFTC utilized the 'Submission System for Merger Remedies,' introduced into the Monopoly Regulation and Fair Trade Act in August last year, for the first time.
The KFTC added, "We will continue to monitor internationally competitive mergers that restrict competition and affect domestic businesses in markets such as semiconductor chips, and we plan to actively apply the submission system for merger remedies going forward."
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