EC approves Ericsson, STMicro joint venture

The deal sets up a business to provide wireless platforms for handsets and semiconductors for mobile communications

The European Commission on Thursday officially approved an Ericsson-STMicroelectronics joint venture to provide wireless platforms for handsets and semiconductors for mobile communications.

The 50/50 joint-venture deal was first agreed between the two companies in August, and it brings together Ericsson Mobile Platforms (the Swedish company's wireless platforms business) and ST-NXP (the Dutch company's wireless semiconductors business). STMicro and Ericsson have had a relationship for some time, and the purpose of the tie-in, according to the companies, is to allow them to offer hardware, software and support across a comprehensive range of technologies.

The joint venture will encompass Ericsson's 3G, HSPA (super 3G) and LTE (the next generation in mobile-broadband connectivity) platform technology, while STMicro is contributing its multimedia and connectivity products, as well as its 2G and 3G handset technology. Both companies also have deals with other mobile vendors.

The Commission said in a statement that it sees no threat to "effective competition" from the deal. "Investigation revealed that the creation of the joint venture would not give rise to competition concerns in the markets for wireless platforms and wireless semiconductors," the Commission said.

The Commission also said it found no "horizontal concerns" in the overall market for wireless platforms, and that any "horizontal overlaps between the activities of [the two companies] are marginal".

It also addressed concerns regarding competing suppliers, saying there would be "no risk that the joint venture would restrict sales of wireless semiconductors supplied by ST-NXP for wireless platforms, as other companies active on the merchant market for platforms are vertically integrated and do not source semiconductors from ST-NXP".

Ericsson has said it will place $1.1bn (£716m) into the joint venture. The joint venture will get around $400m, as $700m will go directly to STMicro.