ON Semiconductor (ON) Agrees to Divest IGBT Business as Part of Fairchild Semi (FCS) Acquisition - FTC

August 25, 2016 10:38 AM EDT

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ON Semiconductor (Nasdaq: ON) has agreed to sell its Ignition IGBT business in order to settle FTC charges that its proposed $2.4 billion acquisition of Fairchild Semiconductor International, Inc. (Nasdaq: FCS) is anticompetitive.

According to the complaint, the merged company would have a combined share of over 60 percent in the worldwide market for Insulated-Gate Bipolar Transistors specifically designed and calibrated for automotive ignition systems, or Ignition IGBTs. Without a divestiture, it is likely that the proposed merger would substantially lessen competition in the worldwide market for Ignition IGBTs, resulting in higher prices and reduced innovation.

Ignition IGBTs are semiconductors that function as solid-state electronic switches in the ignition systems of automotive internal combustion engines. They have to meet the demanding performance requirements and harsh environment of an automotive ignition system.

Phoenix-based ON and Fairchild, headquartered in Sunnyvale, California, both develop, manufacture, and market a wide range of semiconductors. They are each other’s closest competitors for Ignition IGBTs sold to automotive suppliers, who then incorporate Ignition IGBTs into the ignition systems that they sell to automakers.

The proposed consent order, preserves competition by requiring ON to divest its Ignition IGBT business to Chicago-based manufacturer Littelfuse, Inc. within 10 days of the close of the transaction. The divestiture will include design files and intellectual property that Littelfuse needs to manufacture ON’s Ignition IGBTs. ON must also facilitate the transfer of its customer relationships to Littelfuse, and supply Ignition IGBTs for Littlefuse to sell to customers while Littelfuse sets up its manufacturing operations.

Further details about the consent agreement – which includes an asset maintenance order and allows the Commission to appoint a monitor – are set forth in the analysis to aid public comment for this matter.

The Commission vote to issue the complaint and accept the proposed consent order for public comment was 3-0. The FTC will publish the consent agreement package in the Federal Register shortly. The agreement will be subject to public comment for 30 days, beginning today and continuing through September 26, 2016, after which the Commission will decide whether to make the proposed consent order final. Comments can be filed electronically or in paper form by following the instructions in the “Supplementary Information” section of the Federal Register notice.

NOTE: The Commission issues an administrative complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of up to $40,000 per day.

The Federal Trade Commission works to promote competition, and protect and educate consumers. You can learn more about how competition benefits consumers or file an antitrust complaint. Like the FTC on Facebook (link is external), follow us on Twitter (link is external), read our blogs and subscribe to press releases for the latest FTC news and resources.

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