The European Commission has approved, under the EU Merger Regulation, the proposed acquisition of Ansys, Inc. ('Ansys') by Synopsys, Inc. ('Synopsys'). The approval is conditional upon full compliance with the commitments offered by the parties.
The Commission's investigation
The Commission investigated the impact of the transaction in the global markets for the supply of: (i) optics software; (ii) photonics software; and (iii) electronic design automation ('EDA') software tools used for the design of chips, where Synopsys and Ansys's activities actually or potentially overlap.
The Commission also assessed the merged entity's potential ability and incentive to offer bundles or to hamper the interoperability of: (i) different EDA software tools; or (ii) EDA software tools and semiconductor intellectual property ('IP') solutions for system-on-chip designs, of which Synopsys is a leading provider.
The Commission's investigation showed that, while the companies' activities are largely complementary, the transaction, as initially notified, would have reduced competition in the global markets for the supply of: (i) optics software simulating how light behaves in large macro-scale systems (e.g., screen or car headlight); (ii) photonics software simulating how light behaves in smaller nano-scale optical systems (e.g., digital camera or solar panel); and (iii) register-transfer-level power consumption analysis software, which is an EDA software tool used at the early stage of the chip design process to check its power consumption.
The Commission found that the transaction would have resulted in high combined market shares as well as high concentration levels in the above markets. The Commission also found that, after the merger, there would not be enough alternative competitors to exert sufficient competitive pressure on the merged entity. The transaction, as notified, would have led to higher prices and less choice for customers.
The proposed remedies
To address the Commission's competition concerns, the parties offered to divest to a suitable purchaser the entire overlap in terms of the merging parties' respective activities in the markets where the Commission identified significant competition concerns, namely:
- Synopsys' optics and photonics software, including Code V, LightTools, LucidShape, RSoft and ImSym.
- Ansys' register-transfer-level power consumption analysis software PowerArtist.
The commitments fully address the competition concerns by ensuring that there will be sufficient competition and choice in the global markets for the supply of optics, photonics and register-transfer-level power consumption analysis software.
The Commission will approve a suitable purchaser of the divested businesses in a separate procedure. Synopsys can only implement the acquisition of Ansys following that approval.
Following the positive feedback received during the market test, the Commission concluded that the transaction, as modified by the commitments, would no longer raise competition concerns.
The decision is conditional upon full compliance with the commitments. Under the supervision of the Commission, an independent trustee will monitor their implementation.
Companies and products
Synopsys, headquartered in the US, mostly offers EDA software, services, and hardware used to design semiconductor devices, such as chips. Additionally, Synopsys offers semiconductor IP.
Ansys, headquartered in the US, mostly offers multi-physics simulation and analysis software and services to simulate and analyse the behaviour of a product, process, and/or system via digital models. Some of these tools are EDA tools, exclusively used by chip designers in their chip design workflows.
