In recent years, Nvidia has gradually stopped supplying multiple GPU and other products to the Chinese market, causing competitive damage to China's semiconductor market and upstream and downstream industry chain enterprises. On December 9, 2024, China's anti-monopoly law enforcement agencies once again "brandished their swords". Nvidia was investigated by the State Administration for Market Regulation for allegedly violating the "Announcement of the State Administration for Market Regulation on the Approval of Nvidia's Acquisition of the Equity of Melos Technology Co., Ltd. with Additional Restrictive Conditions for Antitrust Review". Against the backdrop of the rapid development of artificial intelligence and other fields worldwide, and the frequent bottleneck of high-end chips in China, this move has received widespread attention.
NVIDIA is a world-renowned manufacturer of graphics processing units (GPUs). This investigation stems from its acquisition of shares in Mailuosi five years ago. In April 2019, Nvidia reported the transaction to law enforcement agencies in relevant anti-monopoly jurisdictions around the world and to the State Administration for Market Regulation in China for business concentration. At that time, Nvidia held over 90% market share in both the global and Chinese GPU accelerator markets, while Maxus held over 50% market share in the global and Chinese markets for dedicated network interconnect devices and high-speed Ethernet adapters. The strong alliance further strengthened its market advantage in the semiconductor field. After in-depth analysis, the State Administration for Market Regulation believes that this concentration has or may have the effect of excluding or restricting competition in the global and Chinese GPU accelerator, dedicated network interconnection equipment, and high-speed Ethernet adapter markets. To this end, Nvidia has submitted measures to address the competition issues arising from the transaction, making clear commitments, including "both parties to the transaction and the centralized entity should continue to supply Nvidia GPU accelerators, Maxus high-speed network interconnection devices, and related software and accessories to the Chinese market based on the principles of fairness, reasonableness, and non discrimination". After evaluation, the State Administration for Market Regulation approved the transaction with additional restrictive conditions in accordance with the law.
In recent years, Nvidia has suspended the supply of multiple GPU accelerator products to China, citing the US government's continuous expansion of semiconductor export controls, which has infringed upon the legitimate rights and interests of relevant Chinese enterprises. The industry is very dissatisfied with this. Nvidia is suspected of violating the Anti Monopoly Law, and it is expected that the State Administration for Market Regulation will initiate an investigation into it. From a legal perspective, Article 46 of the Anti Monopoly Law stipulates that anti-monopoly law enforcement agencies shall investigate suspected monopolistic behavior in accordance with the law. The effective implementation of the restrictive conditions attached to the review decision is not only Nvidia's proactive commitment, but also its legal obligation. If one fails to fulfill their own commitments and eliminate the adverse competitive impact of the transaction on the Chinese market, the basis for law enforcement agencies to approve the transaction will no longer exist, and the relevant transaction will constitute monopolistic behavior within the meaning of the Anti Monopoly Law. From a practical perspective, after Nvidia's acquisition of Maxus, its advantage in the global market has become more apparent. Nvidia's cut-off of supply to the Chinese market has become a fact, causing objective competitive damage that must be corrected and stopped as soon as possible. Nvidia's commitment to the Chinese market came first, followed by the introduction of semiconductor export controls in the United States. Export controls are not a natural reason for Nvidia to violate its own commitments or fail to fulfill its legal obligations. Even if the previous commitment cannot be fulfilled, alternative solutions should be taken to remedy it. From an international perspective, global antitrust enforcement agencies have generally expressed concerns about Nvidia's market monopoly. Since the beginning of this year alone, antitrust enforcement agencies such as the United States, the European Union, the United Kingdom, and France have taken actions such as issuing opinions, conducting surprise inspections, and initiating investigations into whether Nvidia has abused its dominant market position. There are reports that French Finance Minister Bruno Le Maire even believes that Nvidia's dominant position has exacerbated inequality between countries. The investigation by the State Administration for Market Regulation into Nvidia is an independent and professional law enforcement action under the high standard of opening up to the outside world.
For violations of commitments made to antitrust enforcement agencies, corresponding punishment systems have been established in various countries' laws. The United States has clear legal basis for comprehensive punishment. From existing cases, if a company fails to fulfill its commitments in a timely manner, it will be fined daily and sent back for retrial. The European Union stipulates that if the conditions of the commitment are violated, the approval decision will no longer be valid, and law enforcement agencies may re investigate and impose a fine of less than 10% of the total turnover on the behavior that violates the conditions. If the review is re conducted, temporary measures can be taken directly without being limited by the time limit of the original merger review. Article 58 and Article 63 of the Anti Monopoly Law of China clearly stipulate that the State Administration for Market Regulation has the right to impose administrative penalties on Nvidia, such as ordering it to stop implementing concentration, disposing of its shares or assets within a specified period of time, transferring its business within a specified period of time, and taking other necessary measures to restore it to its pre concentration state, and imposing a fine of less than 10% of the previous year's sales revenue; If the circumstances are particularly serious, the impact is particularly severe, and the consequences are particularly serious, a fine of not less than twice but not more than five times the amount of the above-mentioned fine may also be imposed. If Nvidia fails to take effective measures to fulfill its commitments and eliminate the adverse effects of the "supply cut-off" on the Chinese market, or fails to cooperate with relevant investigations in accordance with the law, it will face huge legal risks and pay corresponding illegal costs. Of course, the US government's export control policies may be the actual situation faced by Nvidia, but Nvidia also has an obligation and responsibility to come up with new alternative commitments to eliminate the negative impact of competition arising from its merger.
China is continuously promoting high-level opening up to the outside world, creating a market-oriented, rule of law, and international first-class business environment, and has become an active advocate and leader of globalization. The author believes that in this policy environment, equality of subjects and rule of law are inevitable inherent requirements for achieving a high standard market system. The State Administration for Market Regulation has launched an investigation based on the objective fact that Nvidia was unable to fulfill its commitments during the commitment period, and has implemented the principle of the rule of law through specific law enforcement. This is an effective response to Nvidia's alleged violation of China's Anti Monopoly Law, upholding the authority of the Anti Monopoly Law and reflecting independent professional judgment.
(Author Deng Feng, Professor at Peking University Law School)