MediaTek, MStar merger approved in Taiwan

Fair Trade Commission says merger--to be world's fourth largest integrated circuit designer--between the Taiwanese chipset makers won't hamper market competition and can benefit local economy.

Taiwan's Fair Trade Commission (FTC) has approved chipset maker MediaTek's acquisition of rival MStar Semiconductor, saying the merger will not hamper market competition and can benefit the local economy.

According to a report Wednesday by Central News Agency, the FTC said there were many international rivals competing in the business so chip buyers still had options in the market. It also would not be easy for the merged entity to collaborate with other companies to manipulate product prices or abuse their market strength, the commission added.

As the threshold for new participants to enter the integrated circuit (IC) design business is not high, newcomers can compete in the market and the merger between MediaTek and MStar will unlikely undermine market competition, according to FTC.

It also said the merger would benefit the local economy and raise Taiwan's competitive edge in the global IC industry.

MediaTek expects to complete the merger by early-2013, creating the world's fourth-largest IC designer, the report said.

The FTC noted the merger between the two companies was a horizontal one, as both develop chips used in mobile phones and TVs. Once the merger is complete, MStar will be dissolved while MediaTek will continue to exist.

The approval comes after MediaTek announced a tender offer in late-June to acquire a 40 oercent to 48 percent stake in MStar.