Google’s Motorola Mobility takeover: EU delays ruling

Tuesday, December 13th 2011. | Internet News

Google’s takeover of Motorola Mobility faces a delay after EU regulators suspended their review of the deal.

The European Commission has revealed that it halted the approval process last week, and requested more information.

Motorola split in two earlier this year. Google subsequently offered $12.5bn in August for the part that makes phones and tablet computers.

Google's Motorola MobilityThe EU has the power to block the tie-up or demand that it be amended.

The takeover will give Google access to more than 17,000 of Motorola Mobility’s patents.

Chief executive Larry Page has said the move will “enable us to better protect Android from anti-competitive threats from Microsoft, Apple and other companies”.

Last week Motorola Mobility won the first round of a separate patentbattle against Apple in Germany’s courts. That could potentially give Google leverage to negotiate a wider settlement.

Stopped clock

The European Commission had originally intended to rule on the tie-up by 10 January. It told the BBC it would publish a new deadline at a later point.

“The deadline is suspended because the commission needs from Google certain documents that are essential to its evaluation of the transaction,” said Amelia Torres, spokeswoman for the competition commissioner.

“Once the commission has all the necessary information, it will restart the clock and publish a new phase one deadline on the website.”

Legal experts say it is not unusual for the commission to take this step.

“It’s quite common to stop the clock – it’s done in a significant minority of cases,” said Simon Holmes, head of EU and competition law at SJ Berwin.

“The question that will be in a lot of investors’ minds is whether or not they will be able to clear it in a phase one investigation, or whether they will refer it to a more detailed phase two investigation.”

Patent analysis

Google said that it did not believe the latest news signalled that the deal would be blocked.

“The European Commission has asked for more information, which is routine, while they review our Motorola Mobility acquisition,” a spokeswoman said.

“We’re confident the commission will conclude that this acquisition is good for competition and we’ll be working closely and co-operatively with them as they continue their review.”

The regulator has already sent out questionnaires about the takeover to other firms.

Among the questions it asked was whether Google might favour Motorola Mobility over other Android-based device manufacturers after the deal was finalised.

Experts say that concern is unlikely to derail the deal as Google would effectively be “cutting off its nose to spite its face” if it annoyed other Android partners who could switch to rival system software.

However, the issues raised by Motorola’s patents could cause the European regulator to seek a longer review.

“Frankly I don’t see how that issue can be readily resolved… because that’s the issue that is more difficult to analyse,” said SJ Berwin’s Mr Holmes.

“There are thousands of patents. I don’t know that Motorola itself knows the precise value and validity of all those patents. So how can the commission assess that in the terms of a relatively short merger review?”

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