China's top market regulator launches probe into Nvidia over suspected breach of anti-monopoly law

The State Administration for Market Regulation (SAMR), China's top market regulator, has launched an investigation into Nvidia over suspected violations of China's Anti-monopoly Law and a notice on the 2020 antitrust review decision regarding the approval of Nvidia's acquisition of chip designer Mellanox Technologies with additional restrictive conditions, the SAMR announced on Monday on its official WeChat account.

Nvidia's share price opened 2.4 percent lower on Monday in the US stock market, as China’s top market regulator announced the anti-monopoly probe into the firm, according to market data.

Nvidia has not responded to the Global Times as of press time.

This is a normal regulatory operation conducted by the SAMR in accordance with laws and regulations, and such an antitrust probe does not target any specific enterprise, Wang Peng, an associate research fellow at the Beijing Academy of Social Sciences, told the Global Times on Monday.

In March 2019, Nvidia and Mellanox announced that the companies have reached a definitive agreement, under which Nvidia will acquire Mellanox. Pursuant to the agreement, Nvidia will acquire all of the issued and outstanding common shares of Mellanox for $125 per share in cash, representing a total enterprise value of approximately $6.9 billion, according to a statement released by Nvidia.

On April 16, 2020, the SAMR said in a notice that Nvidia's acquisition of Mellanox was approved by China with restrictive conditions, effective immediately. After six years from the effective date of the restrictive conditions, the involved entities may apply to the SAMR to lift the conditions.

The SAMR received the anti-monopoly declaration of the concentration of operators on April 24, 2019. This concentration has or may have the effect of excluding or restricting competition in the global and Chinese GPU accelerators, private network interconnection devices and high-speed Ethernet adapters markets, the SAMR said, thus it decided to approve such concentration of business operators with additional restrictive conditions.

"China remains committed to opening its market and constantly improving its business environment to be a first-class one under the rule of law for all companies operating in the Chinese market," said Wang Peng, noting that foreign companies have nothing to worry about and are welcome to explore the Chinese market as long as they abide by Chinese laws and regulations.

Last month, Wang Shouwen, China's vice commerce minister, met with Jay Puri, executive vice president of Worldwide Field Operations at Nvidia, in Beijing, where the two sides discussed various topics, including Nvidia's development in China, according to a release by China's Ministry of Commerce (MOFCOM) on November 25.

The vice minister said that China supports efforts by the US chip maker to continue to take root in China and enjoy China's development opportunities. China pledged to create a more favorable environment for foreign companies operating in China.

Puri said that Nvidia regards China as an important market and will continue to strengthen communication with Chinese partners, provide quality and efficient products and services, and actively participate in the development of China's digital economy, according to MOFCOM.