The State Administration for Market Regulation has launched a further antitrust investigation into Nvidia over violations of restrictive conditions related to the Mellanox acquisition.
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On September 12, according to a notice from the State Administration for Market Regulation (SAMR), the SAMR has decided to implement a further antitrust investigation against Nvidia Corporation, accusing the company of violating antitrust laws and restrictive conditions set during the previous acquisition of Mellanox, marking an escalation in regulatory scrutiny of this AI chip giant.
After preliminary investigation, SAMR determined that Nvidia has violated the Anti-Monopoly Law of the People's Republic of China and related regulatory decisions, and the agency initiated a case investigation against Nvidia on December 9 last year.
According to previous reports by CCTV News, due to Nvidia’s suspected violation of the Anti-Monopoly Law of the People's Republic of China and the "SAMR Announcement on the Antitrust Review Decision with Restrictive Conditions Approving Nvidia’s Acquisition of Mellanox Technologies Co., Ltd. Shareholding Case" (SAMR Announcement [2020] No. 16), SAMR is lawfully investigating Nvidia.
This investigation focuses on Nvidia’s 2020 $6.9 billion acquisition of Mellanox. At that time, the transaction received China’s approval with additional restrictive conditions, but regulators now believe Nvidia failed to comply with the relevant commitments. The further investigation will inject uncertainty into Nvidia’s business prospects in China,
After the news was released, Nvidia’s US shares fell more than 2% pre-market.
Regulation Escalates: From Case Filing to Further Investigation
The latest decisions from SAMR indicate that antitrust scrutiny against Nvidia is deepening. After the case was filed in December last year and preliminary investigations, regulators identified violations and decided to implement a stricter, further investigation process.
According to the regulators’ notice, the specific regulations Nvidia is suspected of violating include the Anti-Monopoly Law of the People’s Republic of China and the restrictive conditions set out in the 2020 SAMR Announcement No. 16. These restrictive conditions were a prerequisite for approving Nvidia’s acquisition of Mellanox at that time.
$6.9 Billion Acquisition Case Summary
Nvidia’s acquisition of Mellanox began with the signing of the agreement on March 10, 2019, aiming to acquire all shares of Mellanox. After a lengthy regulatory review process, the transaction was finally approved by the Chinese government with additional restrictive conditions in April 2020.
This $6.9 billion deal officially launched Nvidia into the “network card” market, marking an important transformation from a GPU manufacturer to a data center company. After the acquisition, Mellanox became a wholly owned subsidiary of Nvidia.
The approval process showed the regulatory authorities’ cautious attitude. After SAMR received the declaration in April 2019, the applicant had applied to withdraw the case on February 9, 2020, and then re-declared and was accepted for review on February 12.
SAMR judged at the time that Nvidia’s acquisition of Mellanox had significant impacts on critical technology markets both globally and in China, specifically involving three key market areas: GPU accelerators, dedicated network interconnect devices, and high-speed Ethernet adapters.
Regulators determined that this concentration of operators “has or may have the effect of eliminating or restricting competition” in relevant markets. This assessment served as the basis for setting restrictive conditions and is also an important foundation for the current accusations of Nvidia’s violation.
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