​China gives nod to Nokia-Alcatel deal after extracting patent promise

Nokia has passed another significant regulatory hurdle in its $17bn bid to buy networking rival Alcatel-Lucent.

Chinese regulators set out terms for Nokia bid for Alcatel-Lucent. Image: Shutterstock
China's competition regulator has given conditional approval to Nokia's €15.6bn ($17bn) acquisition of Alcatel-Lucent, after initially raising concerns over Nokia's pricing strategy for wireless patents.

Despite only receiving conditional approval, Nokia has welcomed the decision by China's ministry of commerce. The company needs to pass the international antitrust regulatory reviews for the deal to go ahead.

In August, Nokia and Chinese investment firm China Huaxin proposed the Nokia Shanghai Bell joint venture, hoping for swift approval for the larger Alcatel-Lucent acquisition.

China remained the last major regulatory hurdle following Europe, the US, and several other markets approving the transaction earlier this year.

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Nokia must meet the conditions laid out by the Chinese regulator by December 10, Reuters reported.

The ministry has detailed concerns it had over the concentration of standard essential patents (SEP) for 2G, 3G, and 4G in Nokia's hands after the Alcatel deal goes through.

Patent holders are expected to license SEPs on fair and reasonable non-discriminatory (FRAND) terms. But the ministry noted that most Chinese wireless network-equipment and handset makers don't have the patents required to effectively negotiate cross-licensing deals with Nokia.

If Nokia were to adopt an "unreasonable patent-pricing strategy", the ministry was concerned it could harm competition and, ultimately, Chinese consumers.

Nokia has committed to follow FRAND principles, the ministry said.

After the transaction closes, Nokia-Alcatel will be the second-largest network-equipment vendor behind Ericsson and ahead of the world's third-largest, Huawei.

Nokia is still in the process of gaining formal approval from the French Ministry of Economy under an agreement announced last month. Nokia will then finalise the offer for Alcatel-Lucent's shares, which it expects to occur in the first half of 2016.

"We are pleased to have received clearance from MOFCOM for our proposed acquisition of Alcatel-Lucent. Completion of the material antitrust reviews is another significant milestone in the transaction, as we ready ourselves for operating as a combined company," president and CEO of Nokia Corporation Rajeev Suri said.

"Through Nokia Shanghai Bell, we look forward to maintaining our deep commitment to China and playing a key role in the country's shift towards an innovation-driven economy."

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