Cisco has been cleared by the European Commission to purchase rival videoconferencing company Tandberg, after agreeing to a telepresence concession demanded by regulators.
On Monday, the EC said it would permit the acquisition if Cisco released a protocol called TIP (Telepresence Interoperability Protocol) that enables its top-end telepresence equipment to work with competing equipment from other vendors. Interoperability is essential for businesses to set up videoconferencing calls with other companies who may be using equipment from other suppliers.
"The European Commission has approved under the EU Merger Regulation the proposed acquisition of Tandberg. The approval is notably conditional upon the divestiture of a protocol... called 'TIP' to ensure the interoperability of the merged entity's products with those of its competitors," the regulators said in a statement.
The US Department of Justice also cleared the transaction on Monday, in view of the undertakings Cisco had made to the European regulators.
Cisco said in October that it would buy Norway-based Tandberg for $3.4bn. The deal caused a rapid realignment in the market, with HP distancing itself from Cisco and Polycom signing partnerships with many competing vendors.
Before the deal can go ahead, Cisco will have to identify a neutral organisation to administer TIP and the library of open-source software that other vendors will need to implement it. Under the commission's instructions, the neutral organisation will be able to license those rights to a third party, modify TIP and pass its development to a standards organisation for ratification.
Cisco said it would comply with the commission's instructions. "Our commitments will promote multi-vendor interoperability and contribute to the ubiquity of video communications," said Marthin De Beer, a senior vice president at Cisco, in a statement.
The commission said that without TIP being divested, there would have been "serious competitive concerns" in the market for dedicated room-based telepresence. Analyst firm Ovum said Cisco and Tandberg had greater than 60 percent share of the telepresence market between them at the time the acquisition was announced, but that their impact in desktop videoconferencing was somewhat less.
"Tandberg has the full toybox from legacy right through to telepresence. Telepresence has been the big story, but business videoconferencing as a whole is moving to the desktop as fast as it's moving to the boardroom. Overall, there is plenty of competition," David Molony, Ovum's principal analyst, enterprise, told ZDNet UK on Tuesday.
"Cisco has been reluctant with interoperability with other vendors' solutions, not that any of them are as pure as driven snow. What everyone wants is for Cisco to be fully interoperable," Molony added. "The European Commission is saying 'Let's codify some of that and put it in the hands of the industry'."