The Federal Trade Commission has filed suit to block the $330 million merger of integrated computer circuit makers Integrated Device Technology, Inc. and PLX Technology, Inc., alleging that the deal would give the combined company a near-monopoly.
In an administrative complaint filed Tuesday, the FTC said that the deal would result in higher prices, reduced innovation and lower quality in the $100 million world-wide market for a type of integrated computer circuits called PCIe switches. The switches perform critical connectivity functions in computers and other electronic devices.
PLX, based in Sunnyvale, Calif., is the number one maker of PCIe switches, while Integrated Device Technology, or IDT, which is headquartered in San Jose, Calif., is number two. Both companies are publicly traded. According to the FTC, the merger would give the new company a combined market share of more than 85 percent.
In touting the deal, IDT president Ted Tweksbury in a press release issued in late April cited the companies' "complementary product sets, technologies and customer bases."
IDT is represented by Latham & Watkins partner Joshua Holian, who did not immediately respond to a request seeking comment. PLX is represented by Baker & McKenzie partners Katherine Funk and Brian Burke, who declined comment.
"The combination of IDT and PLX would hurt competition and lead to higher switch prices, lower innovation in the marketplace, and reduced customer service," said Richard Feinstein, director of the FTC’s Bureau of Competition, in a news release.
An evidentiary hearing is scheduled before an administrative law judge at the FTC beginning on May 20, 2013. However, the FTC also said it was prepared to seek a preliminary injunction in federal district court if necessary to stop the deal from closing pending the hearing.
According to the FTC, "Competition between the two firms has led them to offer lower prices, more innovative features, and better customer service" – competition that would be lost by the merger.
The commissioners voted 4 to 0 to bring the complaint, with Commissioner Maureen Ohlhausen recused.
In November, the FTC announced that it was prepared to sue to block Reading Health System’s proposed acquisition of Surgical Institute of Reading L.P. The parties abandoned the deal almost immediately. In January, the FTC filed suit challenging Omnicare Inc.'s hostile acquisition of PharMerica Corp. Omnicare abandoned the merger the following month.