Semiconductor industry: Bundeskartellamt has no objections under competition law to the proposed acquisition of Siltronic AG by GlobalWafers Co. Ltd.

Yesterday, the Bundeskartellamt cleared plans by the Taiwanese company Global-Wafers Co. Ltd. to acquire the majority of shares in and control of Siltronic AG, Munich. The proposed acquisition concerns the manufacture and distribution of silicon wafers, an essential input product in the semiconductor industry.

Andreas Mundt, President of the Bundeskartellamt: “The results of our worldwide investigations at many buyers of silicon wafers have shown that the acquisition raises no serious competition concerns. The acquisition of Siltronic will enable Glob-alWafers to catch up with the worldwide leading Japanese suppliers and even out-pace them in certain product segments. We have therefore examined the project affecting a market which is already highly concentrated very closely. The semicon-ductor manufacturers, which have established global procurement structures, will, however, still have sufficient alternative suppliers to choose from after the merger so that the requirements for prohibiting the concentration under competition law were not met. In this context, we took into account that the major buyers of silicon wafers in Europe, the USA and Asia pursue very sophisticated procurement strate-gies combined with customized manufacturing. The market is also dynamic and volatile. Ultimately, we have found no indication that competition in this area of technological importance might be impeded by the merger.”

According to the results of the worldwide investigations carried out by the Bundeskartellamt at numerous semiconductor manufacturers that are customers of the parties involved, the latter are not considered to be particularly close competitors compared to the remaining competitors. In addition, the semiconductor manufacturers, which are very familiar with the market conditions, will still have sufficient actual and potential alternative suppliers to choose from after the merger.

In the past years, the Taiwanese company GlobalWafers has constantly expanded its position on the international market with additional acquisitions. However, ranking behind the Japanese producers ShinEtsu and SUMCO, Siltronic AG, which is based in Munich, has attained a comparable market position in terms of market shares and is the technological leader in certain product segments.

Due to the comparatively strong and symmetrical market positions of the leading wafer suppliers, the assessment focused on the question whether competition among these suppliers could be significantly restricted following the merger. The market is, however, characterized by a high degree of volatility and dynamism. The buyers rely on multi-sourcing; the procurement strategies of the strong buyers are characterized by regular bilateral price negotiations and shifts in quantity. In combination, these strategies pursued by the buyers suggest that the leading suppliers are unlikely to coordinate their market behaviour as a consequence of the merger.

The cleared merger concerns the intended acquisition of the 30.8 percent share in Siltronic AG currently held by Wacker Chemie AG and all of the remaining shares in Siltronic AG by way of a public takeover bid. The clearance by the Bundeskartellamt only accounts for the anticipated effects of the merger on competition since it is not the competent authority for assessing the project under other legal provisions such as those relating to German foreign trade law.

The Bundeskartellamt will shortly publish a detailed case summary on the legal aspects of the decision.