[Techtaffy Newsdesk]

The European Commission has cleared under the EU Merger Regulation the proposed acquisition of Motorola Mobility by Google. The Commission approved the transaction mainly because it would not significantly modify the market situation in respect of operating systems and patents for these devices.

Joaquín Almunia (Vice president, Competition Policy, European Commission): We have approved the acquisition of Motorola Mobility by Google because, upon careful examination, this transaction does not itself raise competition issues. Of course, the Commission will continue to keep a close eye on the behaviour of all market players in the sector, particularly the increasingly strategic use of patents.

All smartphones and tablets need an operating system. The Commission considered whether Google would be likely to prevent Motorola’s competitors from using Google’s Android operating system. The Commission’s investigation showed Android helps to drive the spread of Google’s other services. Consequently, given that Google’s core business model is to push its online and mobile services and software to the widest possible audience, it is unlikely that Google would restrict the use of Android solely to Motorola, a minor player in the European Economic Area (EEA)1, as compared to operators such as Samsung and HTC, according to an official statement released by the European Commission.

All smartphones also need to adhere to certain telecommunications standards such as 3G or 4G/LTE. Motorola, as some other market participants, holds patents that are essential for these standards to operate. Access to such “standard essential” patents is therefore crucial for players on the smartphone market. However, the Commission concluded that the proposed transaction would not significantly change the existing market situation in this respect.

Finally, the Commission also examined whether Google would be in a position to use Motorola’s standard essential patents to obtain preferential treatment for its services, including search and advertising. The Commission found that Google already had many ways in which to incentivise customers to take up its services and that the acquisition of Motorola would not materially change this.

The Commission therefore concluded that the transaction would not significantly impede effective competition in the EEA or any substantial part of it.

The EC’s decision is without prejudice to potential antitrust problems related to the use of standard essential patents in the market in general. However, any such issues would not arise specifically as a result of the proposed transaction, it said.

Update:

In another development, the Department of Justice’s Antitrust Division has also closed its investigations into Google’s acquisition of Motorola Mobility Holdings.

On Aug. 25, 2011, Google entered into an agreement to acquire Motorola Mobility, a manufacturer of smartphones and computer tablets and the holder of a portfolio of approximately 17,000 issued patents and 6,800 applications, including hundreds of SEPs relevant to wireless devices that Motorola Mobility committed to license through its participation in SSOs.