China Clears Mobile Security Joint Venture With Behavioral Conditions

On Dec. 6, 2012, China’s Ministry of Commerce (MOFCOM) cleared a joint venture between UK semiconductor intellectual property supplier ARM Holdings plc (ARM) and German and Dutch security solutions providers Giesecke & Devrient GmbH and Gemalto NV, with behavioral commitments. The joint venture aims to develop trusted execution environments (TEE) for consumer electronic goods.

MOFCOM found that the deal could harm competitors in mobile security technology. Specifically, it found that ARM might use its market power as the owner of security software program TrustZone to favor its joint venture against other TEE developments, thereby restricting competition in the TEE technology market. MOFCOM considers access to TrustZone essential to developing TEE technology.

MOFCOM ordered ARM to release information on its TrustZone technology to its competitors to allow them to develop their own security solutions. In addition, ARM is prohibited from using its own designs and patents to limit the efficiency of competitor TEEs. The conditions will remain in place for eight years and ARM is obliged to provide annual reports to MOFCOM on its compliance.

The conditions imposed by MOFCOM are almost identical to those imposed by the European Commission in its clearance of the transaction. In particular, the eight-year application of the conditions is the longest imposed so far by MOFCOM and is the same as that imposed by the EU. A copy of the decision can be found here.

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