The State Administration for Market Regulation has launched further antitrust investigations against NVIDIA, involving violations of the restrictive conditions of the Mellanox acquisition

On September 12, according to the announcement from the State Administration for Market Regulation, the State Administration for Market Regulation has decided to conduct further antitrust investigations against NVIDIA Corporation, accusing the company of violating antitrust laws and the restrictive conditions set during its acquisition of Mellanox.

The announcement from the market regulation bureau stated that, following a preliminary investigation, NVIDIA Corporation violated the Anti-Monopoly Law of the People's Republic of China and the announcement regarding the approval of the acquisition of Mellanox Technologies Ltd. with additional restrictive conditions. The State Administration for Market Regulation has decided to conduct further investigations in accordance with the law.

According to a previous report by CCTV News, on December 9, due to NVIDIA Corporation's suspected violations of the Anti-Monopoly Law of the People's Republic of China and the announcement regarding the approval of the acquisition of Mellanox Technologies Ltd. with additional restrictive conditions (Announcement No. 16 [2020] of the State Administration for Market Regulation), the State Administration for Market Regulation has legally initiated an investigation against NVIDIA Corporation.

Following the announcement, NVIDIA's stock fell over 2% in pre-market trading.

Involved in the 5-year-old acquisition of Mellanox

According to the market regulation bureau, NVIDIA violated antitrust laws and the restrictive conditions set during its previous acquisition of Mellanox.

A December 9 article from The Paper mentioned that on April 16, 2020, the State Administration for Market Regulation announced that it decided to approve NVIDIA's acquisition of Mellanox Technologies Ltd. (hereinafter referred to as Mellanox) with additional restrictive conditions.

The announcement indicated that Mellanox was established in Israel in 1999 and primarily engaged in the research, development, production, and sales of network interconnection products. In March 2019, according to the signed agreement, NVIDIA intended to acquire all shares of Mellanox, making Mellanox a wholly-owned subsidiary of NVIDIA On April 24, 2019, the State Administration for Market Regulation received an antitrust filing for the concentration of operators in this case. On February 9, 2020, the filing party requested to withdraw the case and received approval from the State Administration for Market Regulation. On February 12, 2020, the State Administration for Market Regulation accepted the filing party's re-filing for review. The State Administration for Market Regulation believed that this concentration had or might have the effect of excluding or restricting competition in the global and Chinese GPU accelerator, dedicated network interconnection device, and high-speed Ethernet adapter markets.

To approve this case, the restrictive conditions proposed by the State Administration for Market Regulation included: when selling NVIDIA graphics processing unit accelerators (hereinafter referred to as GPU accelerators) and Mellanox high-speed network interconnection devices to the Chinese market, there should be no forced bundling in any way or the addition of any unreasonable trading conditions; customers should not be obstructed or restricted from purchasing or using one type of product separately; there should be no discrimination against customers who purchase one type separately; related products should continue to be supplied to the Chinese market based on the principles of fairness, reasonableness, and non-discrimination; the interoperability of NVIDIA GPU accelerators and Mellanox high-speed network interconnection devices with third-party devices should be maintained; and the commitment to open-source point-to-point communication software and collective communication software for Mellanox devices should continue.

The announcement also mentioned that the State Administration for Market Regulation has the right to supervise the filing party's compliance with the above obligations through monitoring trustees or self-supervision inspections. If the filing party fails to fulfill the above obligations, the State Administration for Market Regulation will take action in accordance with the relevant provisions of the Antitrust Law. The restrictive conditions will take effect from the date of the announcement, and after six years, the parties to the transaction and the entity after the concentration can apply to the State Administration for Market Regulation for the removal of conditions. The State Administration for Market Regulation will decide whether to lift the conditions based on the application and the market competition situation. Without removal, the parties to the transaction and the entity after the concentration must continue to fulfill the restrictive conditions.

In April 2020, after obtaining approval from the Chinese government, NVIDIA announced the completion of its acquisition of Mellanox for a transaction price of up to $6.9 billion, officially entering the "network card" market. Since then, NVIDIA has begun its transformation from a GPU company to a data center company