EC approves Ericsson's Nortel acquisition

European Commission competition regulators have approved Ericsson's acquisition of Nortel's Multi-Service Switching business, saying that the deal will not have a negative impact on other businesses in Europe.

At issue was Ericsson's control of Nortel's considerable mobile and networking business units, which include Nortel Networks, Global Services, Multimedia CDMA and GSM Business.

Nortel already supplies a large number of service providers, and concerns had been raised that the deal could create a market monopoly.

However, competition regulators ruled that, while Nortel and Ericsson provide similar hardware, there is no overlap which could hurt competition.

"The Commission's market investigation identified no competition concerns in relation to the parties' overlapping activities in the market for multi-service switches, which are only sold as replacements, add-ons and extensions to existing customers as there are newer switching technologies," the EC said in a statement.

"However, the investigation revealed that the Nortel multi-service switches are a critical input for Alcatel-Lucent, which is one of Ericsson's main competitors in the downstream market for UMTS/W-CDMA mobile network equipment."

Multi-service switches are proprietary in nature, the EC explained, and Alcatel-Lucent needs Nortel multi-service switches for its UMTS/W-CDMA business which it acquired from Nortel in 2007.

In order to prevent any problems the EC has ensured that Ericsson will keep supplying Alcatel-Lucent with switches and will do the same in its UMTS/W-CDMA businesses.