Commission européenne, DG COMP MERGER REGISTRY, 1049 Bruxelles, BELGIQUE  
Europese Commissie, DG COMP MERGER REGISTRY, 1049 Brussel,   BELGIË  
 
Tel: +32 229 -91111. Fax: +32 229 -64301. E -mail: COMP -MERGER -REGISTRY@ec.europa.eu .  EUROPEAN COMMISSION  
Brussels,  19.12.2019  
C(2019 ) 9467 final  
PUBLIC VERSION  
 
To the notifying party  
Subject : Case M.9424 – NVIDIA / MELLANOX  
Commission decision pursuant to Article 6(1)(b) of Council Regulation 
No 139/20041 and Article 57 of the Agreement on the European Economic 
Area2 
Dear Sir or Madam,  
(1) On 14 November 2019 , following a referral pursuant to Article 4(5) of the Merger 
Regulation, the European Commission received notification of a proposed 
concentration pursuant to Article 4 of the Merger Regulation  by which NVIDIA 
Corporation (“ NVIDIA ”, USA ) intends to acquire within the meaning of Article 
3(1)(b) of the Merger Regulation control of Mellanox Technologies, Ltd. 
(“Mellanox ”, Israel) by way of purchase of shares (the “Transaction”)3. NVIDIA is 
designated hereinafter as the “Notifying Party”, and NVIDIA and Mellanox are 
together referred to as the “Parties”, while the undertaking resulting from the 
Transaction is referred to as the "Merged Entity".  
                                                 
1  OJ L 24, 29.1.2004, p. 1 (the “Merger Regulation ”). With effect from 1 December 2009,  the Treaty on the 
Functioning of the European Union ( the “ TFEU ”) has in troduced certain changes  into Union law , such as 
the replacement of  “Community ” by “Union ” and “common market ” by “internal market ”. The 
terminology of the TFEU will be used throughout this decision.  
2  OJ L 1, 3.1.1994, p. 3 (the “EEA Agreement”).  
3  Publication in the Official Journal of the European Union No C 398 , 25.11.2019 , p. 6. 

 
 
2 1. THE PARTIES  
(2) NVIDIA is a publicly trade d Delaware Corporation, founded in 1993 and 
headquartered in Santa Clara, California. NVIDIA invented the graphics processing 
unit (“ GPU ”) in 1999. NVIDIA specializes in markets in which GPU -based visual 
computing and accelerated computing platforms can pr ovide enhanced throughput 
for applications. NVIDIA’s products address four distinct areas: gaming, 
professional visualization, datacentre, and automotive. Only the datacentre area is 
relevant to the Transaction with Mellanox, as datacentre customers are th e only ones 
also procuring components from Mellanox. In addition to GPU cards, NVIDIA 
produces software called “NVIDIA GRID” that allows computers that do not have 
their own GPU to use “virtual GPUs”. Moreover, it offers one family of server 
systems (DGX -1, DGX -2, and DGX -Station) that perform GPU -accelerated 
Artificial Intelligence (“ AI”) and deep learning training and inference applications. 
Finally, NVIDIA also offers the NGC Software Hub, a cloud -based software 
repository for AI developers that provides  deep learning software stacks.  
(3) Mellanox is a publicly held corporation, founded in 1999 and headquartered in 
Sunnyvale, California and Yokneam (Israel). Mellanox offers network interconnect 
products and solutions that facilitate efficient data transmission between servers, 
storage systems and communications infrastructure equipment within datacentres, 
based on two network interconnect protocols: Ethernet and InfiniBand. Mellanox’s 
network interconnect components include the following: network in terface cards 
(“NICs ” or “ network adapters ”), switches and routers, cables, and related software.  
2. THE CONCENTRATION  
(4) On 10 March 2019, NVIDIA, NVIDIA International Holdings Inc., (“ NVIDIA 
Holdings ”, USA ), Teal Barvaz Ltd.  (“Teal Barvaz ”, Israel ) and Mellano x entered 
into an Agreement and Plan of Merger (“ Merger Agreement ”). NVIDIA Holdings 
is a wholly -owned subsidiary of NVIDA. Teal Barvaz is a wholly -owned subsidiary 
of NVIDIA Holdings.  
(5) Pursuant  to the Merger Agreement, the Transaction will be implemented a s follows: 
Teal Barvaz (Merger Sub) merges with and into Mellanox with Mellanox being the 
surviving entity, following which Teal Barvaz will cease to exist, and Mellanox will 
become a wholly owned subsidiary of NVIDIA Holdings. Each of Mellanox’s shares 
will be transferred to NVIDIA Holdings in exchange for the right to receive an 
amount in cash equal to USD 125 (approximately EUR 106), representing a total 
acquisition value of approximately USD 6  900 m illion (approximately EUR 5  800 
million) to be paid by NVIDIA.  
(6) Therefore, NVIDIA (via NVIDIA Holdings) will acquire sole control over Mellanox 
and the Transaction constitutes a concentration within the meaning of Article 3(1)(b) 
of the Merger Regulation.  
3. UNION  DIMENSION  
(7) The Transaction does not have a Union di mension within the meaning of Article 
1(2) or Article 1(3) of the Merger Regulation as the EU turnover of one of the 
 
 
3 Parties (Mellanox) in the last financial year for which data is available at the date of 
notification amounted to EUR […]. 
(8) On 14 June 2019,  the Notifying Party informed the Commission by means of a 
reasoned submission that the Commission should examine the Transaction pursuant 
to Article 4(5) of the Merger Regulation. The Commission transmitted a copy of that 
reasoned submission to the Member  States on 14 June 2019.  
(9) In fact, the Transaction fulfils the two conditions set out in Article 4(5) of the 
Merger Regulation since it is a concentration within the meaning of Article 3 of the 
Merger Regulation and it is capable of being reviewed under the  national 
competition laws of three Member States, namely Czechia, Germany and Hungary.  
(10) As none of the Member States competent to review the Transaction expressed its 
disagreement as regards the request to refer the case, the Transaction  is deemed  to 
have a Union dimension pursuant to Article 4(5) of the Merger Regulation.  
4. RELEVANT MARKETS  
4.1. Introduction  
(11) The Transaction concerns key components used in datacentre servers, in particular 
those used for high performance computing (“ HPC ”; also sometimes refe rred to as 
“supercomputing ”). HPC datacentres deliver the computation power required for 
research and innovations in a number of key developing areas such as autonomous 
driving, weather forecast, oil exploration  and astrophysics. In particular, HPC 
datacen tres are key enablers for many AI applications. Both Parties supply different 
components that can be used in datacentre servers.  
(12) Datacentres are a collection of servers that are connected by a network and that work 
together to process/compute workloads. Da tacentres in general have three 
fundamental elements: (1)  storage/memory, (2) network interconnect, and (3) 
processing/computing included in the servers, as Figure 1 illustrates.  

 
 
5 4.2. Discrete GPUs for datacentres  
4.2.1.  Introduction  
(18) GPUs are specialis ed semiconductor device s that are optimized for processing 
graphic images. They are made available to customers either as standalone, or 
“discrete”, semiconductor devices or as integrated components of chips that contain 
other components, including a central processing unit (“ CPU”). In datacentres, 
GPUs are used to accelerate the datacentre workload computing/processing. They 
are only used in datacentres that require acceleration. They are necessarily used in 
addition to  CPUs, which are always present in datacentre servers.  
(19) When CPUs and GPUs are combined in a datacentre  server , they carry out 
complementary computational tasks. CPUs operate as the general purpose 
centralised “brains” of computer systems. They are able to perform all types of 
operations. In contrast, GPUs – althoug h they have more limited computational 
capabilities – are much better suited to process graphic images or computations that 
require massive parallel execution of relatively simple computational tasks. This is 
why GPUs are increasingly used in HPC and key A I applications, which both require 
massive parallel execution of rudimentary arithmetic operations.  
(20) Other types of accelerators are sometimes used in datacentre  server s: (1) field 
programmable gate arrays (“ FPGAs ”); (2) application specific integrated cir cuits 
(“ASICs ”); (3) CPUs with integrated GPUs or many -core CPUs  (as opposed to the 
standalone/discrete GPUs offered by NVIDIA).  
4.2.2.  Product market definition  
4.2.2.1. Commission precedents  
(21) The Commission has not assessed the boundaries of the market for discrete GPUs 
for datacentres in past decisions. However,  in its 2011 Intel/McAf ee decision,6 the 
Commission has defined a separate market for CPUs based on the x86 architecture 
("x86 CPUs "), in which GPUs and other accelerators were not included. In its 2015 
Intel/Alte ra decision, t he Commission also defined a separate market for FPGAs, 
distinct from other complex programmable logic devices (“ CPLDs ”) and from 
GPUs.7 
4.2.2.2. Notifying Party’s views  
(22) The Notifying Party submits that the relevant product market is the market for 
datacentre processing, which includes all types of processing, i.e., GPUs, as well as 
CPUs, FPGAs, ASICs (including ASICs developed in -house by companies, e.g., 
Google’s Tensor Processing Unit (“ TPU ”)) and any other processors/accelerators for 
datacentres.8 
(23) The Notifying Party submits that from a demand -side perspective, for datacentre 
customers, GPUs are one acceleration choice amongst many and that the competition 
                                                 
6  Commission decision of 26 January 2011 in case M.5984 – Intel/McAfee , paragraph 30.  
7  Commission decision of 14 October 2015 in cas e M.7688 – Intel/Altera , paragraph 41.  
8  Form CO, paragraph 183.  
 
 
6 between accelerators is fierce. The Parties submit that GPUs cannot perform any 
processing tha t cannot also be performed by CPUs, FPGAs, ASICs, and other 
accelerators. Customers would  consider all datacentre processing options, not only 
GPUs, which competitively constrains GPUs. No accelerator, or even any category 
of accelerators, is essential and  indispensable to any datacentre. When designing and 
constructing their datacentres, customers will consider the processing needs of the 
datacentre as a whole. Datacentre customers compare all processing options in 
accordance with multiple variables, most notably price, performance, efficiency, and 
scalability.9 Additionally, the Notifying Party submits that no accelerator option is 
always best suited for all applications, or even for a given type of application.10 
(24) Moreover, the Notifying Party submits that the different types of datacentre 
accelerators are also constrained by cloud -based computing, for the following 
reasons. On the one hand, when customers compare the overall price and 
performance of datacentres, they take into account both building a system  on their 
own premises and buying cloud -based datacentre computing. This would in turn 
constrain the GPU’s pricing and commitment to innovation. On the other hand, GPU 
sales to cloud service providers are constrained by the in -house solutions these 
provide rs develop.11 
(25) The Notifying Party submits that there is also supply -side substitution. Several 
suppliers of datacentre processing have developed products that perform parallel 
processing, and act as accelerators, even if the suppliers do not name the produc ts 
GPUs.12 Finally, the Notifying Party claims that suppliers of GPUs for use beyond 
datacentres can also easily supply datacentre GPUs. This is because both types of 
GPUs are based on the same fundamental architecture.13 
4.2.2.3. Results of the market investigation and Commission’s assessment  
(26) As a preliminary remark, the market investigation confirmed that discrete GPUs for 
datacentres and discrete GPUs for gaming are part of different markets.14 While the 
two types of GPUs are based on the same architecture,15 they ha ve different levels of 
performance, due to technical limitations of the GPUs for gaming.16 Moreover, 
contractual restrictions and driver support prevent purchasers of NIVIDIA’s discrete 
GPUs for gaming from deploying these in datacentres.17 As a result, the majority of 
                                                 
9  Form CO, paragraphs 213 -215. 
10  Form CO, paragraph 216.  
11  Form CO, paragraph 212.  
12  Form CO, paragraph 294.  
13  Form CO, paragraph 295.  
14  NVIDIA’s GPUs are also used to create enhanced computer graphics for video games, professional 
visualisation and automotive applications. However, demand substitution seems to be limited because the 
GPU product lines used for such applications are not the same as the ones used for datacentre workloads.  
Moreover, NVIDIA has banned the use of its consumer -grade GPUs in datacentres (via licensing 
restrictions).  From a supply side perspective, it is difficult to switch from supplying GPUs for graphics to 
supplying GPUs for datacentre due to the software bar rier to entry created by the entrenchment of 
NVIDIA’s CUDA software as the dominant programming GPU interface.  
15  Form CO, paragraph 295.  
16  See Replies to Questionnaire Q2 to OEMs, questions 8 and 8.1.; Questionnaire Q3 to End C ustomers , 
questions 9 and 9 .1; agreed minutes of the conference call of 25 October 2019 with a CSP, paragraph 10.  
17  See Replies to Questionnaire Q2 to OEMs, questions 8 and 8.1.; Questionnaire Q3 to End C ustomers , 
questions 9 and 9.1; .agreed minutes of the conference call of 25 Oc tober 2019 with a CSP, paragraph 10.  
 
 
7 datacentre customers does not consider discrete GPUs for datacentres and discrete 
GPUs for gaming as substitutes.18 
(27) As for the different types of datacentre processors, such as integrated GPUs, CPUs, 
FPGAs or ASICs, the responses to the market i nvestigation showed that competitors, 
OEMs and most end customers consider different types of accelerators to be suitable 
for different kinds of HPC and deep leaning applications. 19 They are therefore likely 
not part of the same market as discrete GPUs for  datacentres.20 
(28) Competitors and OEMs indicated that there are specific datacentre parallel 
workloads for which GPUs have become the standard acceleration solution. They 
submitted that for the most powerful high performance computers as well as for AI 
applic ations, a combination of CPUs and GPUs achieves the maximum efficiency. 
End c ustomers would therefore prefer it to CPU -only architectures.21 
(29) Several CSPs  submitted that some high performance cloud computing customers 
specifically ask for GPU accelerated servers for certain types of workloads, such as 
deep learning, physic simulation or molecular modelling. These customers would not 
be willing to perform th ese compute -intensive workloads on servers with other types 
of acceleration.22 This could be because the workload of these customers is already 
optimized for NVIDIA’s GPUs ( e.g., using NVIDIA ’s Compute Unified Device 
Architecture (“ CUDA ”)).23 Moreover, for s ome applications, the total cost of 
ownership is lower when using GPUs, while for other applications, other types of 
accelerators (TPUs, FPGAs) have a total cost of ownership advantage.24 Therefore, 
the CSPs consider that in most cases, GPUs and other types  of accelerators are not 
substitutable when considering the specific applications they are meant to serve.  
(30) The above was confirmed by the replies of end customers. For most HPC 
applications, the majority of end -customers considered only discrete GPUs, 
integrated GPUs and adding more CPUs as suitable alternatives.25 However, they 
considered both integrated GPUs and adding more CPUs to have certain limitations 
in comparison with discrete GPUs. End customers pointed out that  integrated GPUs 
                                                 
18  See Replies to Questionnaire Q3 to End C ustomers , questions 9 and 9.1.  
19  Replies to Questionnaire Q1 to Competitors, questions 6 to 7.1; Questionnaire Q2 to OEMs, questions 6 to 
7.1; Questionnaire Q3 to End C ustomer s, questions 6 to 7.1.  
20  The Commission also assessed whether discrete GPUs for datacentres are constrained by cloud -based 
solutions. However, the large majority of end customers stated that they would not consider renting 
computing power “as -a-service” f rom cloud -based solutions using the cloud service supplier’s own in -
house accelerator, such as Google’s TPU, even if the prices for a cluster of GPU accelerated servers were 
to increase as a result of an increase in the price of GPUs. This is partly due to  cost reasons, but also, 
especially for universities and research centres based in the EEA, due to their funding schemes and the 
desire to not move their data on non -EEA cloud providers. See Replies to Questionnaire Q3 to End 
Customers , questions 13 and 13 .1. Based on this, the Commission considers that discrete GPUs for 
datacentres are not part of the same product market as cloud -based solutions.  
21  See agreed minutes of the conference call of 9 August 2019 with a competitor, paragraphs 7 and 10; 
agreed mi nutes of the conference call held with a major OEM on 12 August 2019, paragraphs 9 and 10.  
22  Agreed minutes of the conference call of 11 October 2019 with a CSP, paragraph 11; agreed minutes of 
the conference call of 25 October 2019 with a CSP, paragraph 6. 
23  Agreed minutes of the conference call of 11 October 2019 with a CSP, paragraph 11.  
24  Agreed minutes of the conference call of 11 October 2019 with a CSP, paragraph 11; agreed minutes of 
the conference call of 25 October 2019 with a CSP, paragraph 7.  
25  Replies to Questionnaire Q3 to End C ustomers , questions 6 to 7.1.  
 
 
8 mainly support l ight acceleration tasks, while adding more CPUs entails adding 
expense and power consumption in comparison to using discrete GPUs.26 
(31) Moreover, for demanding parallelis ed workloads, ASICs and FPGAs are not 
considered suitable alternatives.27 This is because A SICs are typically designed for 
very specific workloads and only for a particular customer. Since they lack 
flexibility and built -in software environment, they are not a suitable option for 
customers with limited resources who need to perform a range of di fferent HPC 
workloads.28 
(32) As for FPGAs, the respondents to the market investigation considered that while 
they are highly flexible and can be programmed to run parallelized workloads, they 
are unsuitable for most HPC applications. This is because, when compa red to GPUs, 
FPGAs are relatively inefficient in terms of energy consumption, cost more and are 
more difficult to program.29 
(33) End customers confirmed that when they decided to acquire a GPU accelerated 
server in the past, no other type of accelerator was con sidered a suitable alternative.30 
All end customers that replied to the question confirmed that for all GPU accelerated 
datacentres they procured between 2017 and 2019, they procured the GPUs from 
NVIDIA and were either not open to any alternative accelerat ed processing solutions 
or considered only GPUs from AMD as an alternative.31 
(34) Based on the above, the Commission considers that there is a separate product 
market for discrete GPUs for datacentres , which does not include other types of 
datacentre processing  solutions.  
4.2.3.  Geographic market definition  
(35) The Commission has not assessed the geographic scope of the market for discrete 
GPUs for datacentres in past decisions. However, it has concluded that the market 
for CPUs (and possible segments thereof)32 as well as the market for FPGAs33 is 
worldwide in scope.  
(36) The Notifying Party submits that the relevant geographic market for datacentre 
processing should be defined as worldwide.34 This should remain the case even for 
potentially narrower product markets.35 
                                                 
26  Replies to Questionnaire Q1 to Competitors, question 6.1.1 ; Questionnaire Q3 to End C ustomers , question 
6.1.1.  
27  See Replies to Questionnaire Q1 to Competitors, question 6.1.1; agreed minutes of the conference calls of 
29 July and 12 August 2019 with a major OEM, paragraph 12; agreed minutes of the conference call of 12 
August 2019 a major OEM, paragraph 10.  
28  See Replies to Questionnaire Q1 to Competitors, question 6.1.1; agree d minutes of the conference call of 
12 August 2019 with a major OEM, paragraph 10.  
29  See Replies to Questionnaire Q1 to Competitors, question 6.1.1.  
30  Replies to Questionnaire Q3 to End C ustomers , question 10.  
31  Replies to Questionnaire Q3 to End C ustomers , question 10.  
32  Commission decision of 14 October 2015 in case M.7688 – Intel/Altera , paragraph 25.  
33  Commission decision of 14 October 2015 in case M.7688 – Intel/Altera , paragraph 57.  
34  Form CO, paragraph 360.  
35  Form CO, paragraph 367.  
 
 
9 (37) The majority  of competitors, OEMs and end customers that replied to the market 
investigation confirmed that accelerated processing solutions are supplied on a 
worldwide basis, irrespective of the location of the component vendor or the location 
of the end -customer.36 Moreover, the majority of competitors and OEMs and all end 
customers that expressed a view confirmed that the conditions of competition do not 
differ depending on the location of the datacentre of the end customer.37 
(38) In light of the results of the market inv estigation, for the purposes of this decision, 
the Commission considers that the geographic market for discrete GPUs for 
datacentres is worldwide in scope.  
4.3. Datacentre network interconnects  
4.3.1.  Introduction  
(39) Datacentre’s network interconnects enabl e the transfer of data between servers or 
systems, e.g., connecting multiple servers together or connecting a server in a 
datacentre to a storage appliance.  
(40) Network interconnects are made up of the following main components: (i) NICs that 
are used in the s erver, enabling it to communicate with other devices on the network; 
(ii) switches and routers that manage communications between servers;38 (iii) cables 
that connect devices together and carry the data signals between devices; and (iv) 
supporting software.  
(41) Network interconnects can be based on a variety of protocols , some of which are 
based on open standards ( e.g., Ethernet, InfiniBand and Fibre Channel (“ FC”)), 
while others are custom or proprietary ( e.g., Cray’s Aries/Gemini/Slingshot, Atos 
Bull’s BXI, an d Fujitsu’s Tofu)39. The latter are currently not available to external 
server OEMs, they are only sold within their supplier’s own systems.  
(42) The technical parameters considered by customers when selecting an interconnect 
solution include inter alia bandwidth, latency, interoperability, congestion control, 
deployment. Based on the results of the market investigation, bandwidth and latency 
are particularly importance parameters for HPC customers.40 Bandwidth is a measure 
of how much data can be sent an d received at a time, which is a critical factor given 
it measures the capacity of a network. Latency measures the time required to 
transmit a packet across a network. In addition to these factors, customers would 
consider total cost of ownership, as well as other parameters such as the quality of 
service.  
                                                 
36  Replies to Questionnaire Q1 to Competitors, questions 12 and 12.1; Questionnaire Q2 to OEMs, questions 
13 and 13.1; Questionnaire Q3 to End Customers, questions 16 and 16.1.  
37  Replies to Questionnaire Q1 to Competitors, questions 13 and 13.1; Questionnaire Q2 to OEMs, questions 
14 and 14.1; Questionnaire Q3 to End Customers, questions 17 and 17.1.  
38  They are analogous to switchboard operators on old phone systems, connecting calls between devices.  
39  FC is a standard that is used primarily in storage networ ks, whereas Ethernet, InfiniBand and other custom 
and proprietary network interconnects are mainly used to ensure the flow of data across the many servers 
composing the datacentre.  
40  See for example agreed minutes of the conference call of 12 August 2019 with a large OEM, paragraph 6; 
agreed minutes of the conference call of 9 August 2019 with an end -customer providing HPC services to 
universities and research centres, paragraph 13 ; and Intel’s submission of 10 September 2019 entitled 
“Intel response to ca se team’s questions”, question 4. b. 
 
 
10 (43) Mellanox’s products are based on the Ethernet and InfiniBand protocols. Mellanox 
offers network interconnect integrated systems and components , which  include 
NICs, switches, cables, and related software.  
4.3.2.  Product market definition  
4.3.2.1.  Commission precedents  
(44) There are no Commission precedents defining the relevant markets for the datacentre 
network interconnect products manufactured and supplied by Mellanox.  
(45) Several Commission decisions however address transactions involving network 
interconnect switch suppliers. In Broadcom/Brocade ,41 the Commission 
distinguished between the two main components of Fibre Channel SAN networks, 
i.e. switches and adapters. As rega rds switches, the Commission has previously 
considered a segmentation based on the different protocols and network technologies 
that they support.  
(46) In addition, in a previous decision,42 the Commission stated that the majority of 
respondents to its market i nvestigation were of the view that the SerDes 
(serializer/deserializer) intellectual property used in high -speed NICs should be 
placed in different markets “ for each standard speed (1G, 10G, 25G, 50G and the 
future 100G.) ”.  
4.3.2.2.  Notifying Party’s view s 
(47) The Notifying Party submits that the relevant product market is the market for 
datacentre network interconnect, which includes all types of datacentre network 
interconnect solutions and all individual components.  
(48) First, the Notifying Party submits that,  from a demand -side perspective, Mellanox’s 
InfiniBand and Ethernet products are substitutable with datacentre interconnect 
products based on other protocols. This is based on the following main arguments:  
 All of the competing protocols serve the same purp ose and function and there 
are no technical differences between the major interconnects that would limit 
their substitutability. In particular, technically, Ethernet as well as other 
protocols are similar to InfiniBand on every relevant parameter, includin g, in 
particular, bandwidth and latency.  
 Customers typically invite bids from different suppliers for different 
datacentre network interconnect solutions as illustrated by a number of 
examples of bids in which Mellanox’s Ethernet - and InfiniBand -based 
solutions competed directly against network interconnect solutions based on 
other protocols.  
 Customers can and do switch from one protocol to another for newer 
generation datacentres as illustrated by a number of examples of customers 
having switched away fro m InfiniBand. In addition, customers can 
                                                 
41  Commission decision of 12 April 2017 in case M.8314 – Broadcom/Brocade , paragraphs 25 -46. 
42  Commission decision of 23 November 2015 in case M.7686 – Avago/Broadcom , paragraph 60.  
 
 
11 implement modules within a datacentre that use different network 
interconnects given that datacentre networking products comply with open 
standards and are interoperable.  
(49) Second, the Notifying Party submits that th ere is a high degree of supply side 
substitutability for different interconnect solutions. Specifically, the Notifying Party 
explains that the barriers to enter another interconnect solution are quite low from 
the perspective of an existing supplier. In th is respect, the Notifying Party estimates 
that suppliers can switch between the development and supply of different network 
interconnect solutions with an investment of less than USD […] and over a period of 
around […] years. The Notifying Party also descr ibes examples of suppliers having 
abandoned InfiniBand and other interconnect technologies in favour of Ethernet, 
noting that these suppliers possess the technology and knowledge to readily switch 
back to these interconnect technologies.  
(50) Third, the Notifyi ng Party submits that, even though it may be conceivable from a 
demand -side perspective, it is not appropriate to define separate markets for each of 
the components that make up network interconnects given that competition among 
providers of datacentre com ponents occurs at the “interconnect solutions” level. 
According to the Notifying Party this is also supported by the following supply -side 
substitutions considerations: (i) the know -how and technical skills for different 
components of interconnect solution s are similar and transferrable and (ii) some 
interconnect competitors ( e.g., Cray) price and sell their offerings at the system 
level, not the component level.  
(51) Fourth, the Notifying Party submits that the market for datacentre network 
interconnect should  not be further sub -segmented based on  bandwidth . In particular, 
the Notifying party considers that it would be incorrect to define a market for 
Ethernet NICs that support bandwidths of 25 Gb/s or higher since both other 
network interconnect protocols and Ethernet NICs that support bandwidth of below 
25 Gb/s exercise competitive constraints on 25 Gb/s+ Ethernet NICs.  
(52) With respect to the competitive pressure exercised by Ethernet NICs that support 
bandwidth of below 25 Gb/s, the Notifying Party argues that the same hardware can 
be used for Ethernet NICs of different speeds and that a customer can therefore 
combine several 10 Gb/s NICs as an alternative to match the performance of a 25 
Gb/s+ NIC. In addition, Mellanox reports that it has experienced situation s where 
customers declared a strong preference for deploying 25 Gb/s+ Ethernet solutions in 
a datacentre node, but based on cost, convenience and other factors ultimately 
deployed 10 Gb/s solutions.  
4.3.2.3.  Commission’s assessment  
(53) The Commission has cons idered a potential segmentation of the market for 
datacentre network interconnect s between the various protocols  and network 
technologies that they support.  In particular, the Commission has considered a 
distinction between high performance fabrics and Eth ernet -based network 
interc onnects. The Commission has also  considered further potential sub -
segmentations within high performance fabrics and Ethernet -based network 
interconnects.  
 
 
 
12 (1) Distinction between protocols  
(54) Among the different protocols used for runni ng datacentre network interconnects, 
the Commission has considered a potential distinction between, on the one hand, 
high performance fabrics and, on the other hand, Ethernet based network 
interconnects.  
(55) Ethernet is the most widely used protocol for netwo rk interconnect solution around 
the world. It is also the fastest growing interconnect protocol. Ethernet products are 
supplied by companies including Mellanox, Intel, Broadcom, Arista, Cisco, and 
Juniper.43 Ethernet -based network interconnect solutions are  available for a range of 
speed including speeds delivering high performance of above 25 Gb/s. In addition, 
Ethernet suppliers have developed new protocols to combine Remote Direct 
Memory Access  (“RDMA ”) technology with Ethernet (namely RDMA over 
converged  Ethernet (“ RoCE ”) and iWARP protocols) allowing to reduce the 
latencies for Ethernet.  
(56) Besides Ethernet -based network interconnects, a number of suppliers offer high 
performance fabrics.44 High performance fabrics are integrated systems of custom 
hardware including NICs, switches, and cabling. They are designed to run on custom 
protocols and orchestrated by custom software. High -performance fabrics typically 
enable reliable high -speed communicatio ns across several hundreds or thousands of 
nodes . The different fabric components are designed to work together as part of the 
integrated fabric and are orchestrated by sophisticated software. High performance 
fabrics include Mellanox’s InfiniBand and Inte l’s Omni -Path, as well as custom 
datacentre network interconnects based on protocols that are compatible with 
Ethernet such as Cray’s Aries/Gemini/Slingshot, Bull’s BXI and Fujitsu’s Tofu.  
(57) Based on its market investigation, the Commission i dentifies two distinct product 
markets for (i) high performance fabrics and (ii) Ethernet -based network 
interconnects. This conclusion is based on the limited substitutability between high 
performance fabrics and Ethernet -based network interconnects, both from a demand -
side and supply -side perspective.  
(58) First, from a demand -side perspective, w hile the performance of Ethernet -based 
systems has increased in the recent years, this performance remains significantly 
inferior to the performance achieved by high pe rformance fabrics and in particular 
by Mellanox’s InfiniBand on a number of key parameters.  Based on the results of 
the market investigation, the main performance gap between high performance 
fabrics and Ethernet -based solutions concerns latency.45 Indeed, a large number of 
                                                 
43  The Notifying Party also mentions smaller suppliers of Ethernet -based network interconnects including 
Extreme Networks, Solarflare (which is to be acquired by Xilinx), QLogic, Chelsio Communications, 
Myricom, Barefoot Networks (which is to be acquired by Intel), etc. In addition, some inte rconnect 
customers have developed their in -house interconnect. For example, Google uses its own Ethernet -based 
custom network interconnects.  
44  Network interconnects can also be based on the Fibre Channel protocol. Fibre Channel is however 
primarily used f or a different (complementary) function than Mellanox’s InfiniBand and Ethernet -based 
network interconnects. Fibre Channel is used to connect storage servers in modules within datacentres. 
Today, Fibre Channel products are supplied by companies including B roadcom, Marvell, Cisco, IBM, 
HPE, etc.  
45  Respondents also mentioned other parameters. For example, Intel explained that InfiniBand offers a 
number of advantages over Ethernet including lossless data transport (information or packets are not 
 
 
 
13 customers and competitors explained that Ethernet -based solutions do not constitute 
a suitable alternative to high performance fabrics because of significantly lower 
performance in terms of latency. Certain respondents further explained t hat low 
latency requirements in customer’s specifications de facto  exclude Ethernet -based 
solutions from certain HPC tenders.46  
(59) For example, a large OEM explained: “ for some applications, low latency is a 
necessity and so is a high performance  fabric ”.47 With respect to the question 
whether Ethernet -based solution could be an alternative, this OEM further explained: 
“as a general principle, Ethernet is unsuitable for low latency modules. Ethernet will 
therefore generally not be a possible substitute for appl ications requiring the level of 
performance which Mellanox’s InfiniBand can deliver ”. 
(60) Mellanox’s own data also confirms the gap in latency between high performance 
fabrics and Ethernet based solutions since th ese show  that the latency of Mellanox’s 
most ad vanced Ethernet NIC is […] the latency achieved by its InfiniBand 
products.48  
(61) Second, respondents to the Commission’s market investigation confirm that there is 
no demand -side substitutability between high performance fabrics and Ethernet -
based solutions f or a significant portion of HPC datacentres applications. All 
competitors, all OEMs and a majority of end -customers who expressed their view s 
consider that there are applications and workloads for which their company would 
only consider high performance fa brics as suitable.49 These are typically high -end 
HPC and AI deep learning training applications, which require large systems 
combining many hundreds or thousands of nodes and for which low latency and high 
bandwidth is particularly important.50  
(62) A number of  universities and research centres further explained that their server 
clusters must be capable of accommodating a broad range of HPC workloads, 
including workloads requiring low latency for which only high performance fabrics 
are suitable.51 Since low late ncy is a requirement at least for certain workloads, these 
customers explained that they consider high performance fabrics as the only possible 
choice for equipping the HPC server clusters that they operate.  
(63) In addition, two major OEMs provided data on the  last ten GPU accelerated 
datacentres (or GPU accelerated server clusters within datacentres) connected with 
                                                                                                                                                      
dropped), higher throughput rates, and significantly lower latency. See Intel response to the case team’s 
questions, 9 September 2019, pages 16 -17. 
46  Replies to Questionnaire Q2 to OEMs, question 21.1.  
47  See agreed minutes of the conference calls of 28 July 2019 a nd 12 August 2019 with a large OEM, 
paragraphs 13 -19. See also Replies to Questionnaire Q2 to OEMs, questions 21 and 21.1.  
48  Form CO, Annex RFI 4 – 01, Table 5.  
49  Replies to Questionnaire Q3 to End C ustomers , question 19; Questionnaire Q2 to OEMs, questi ons 21 and 
21.1.; Questionnaire Q1 to Competitors, questions 15 and 15.1.  
50  See for example agreed minutes of conference call of 12 August 2019 with a large OEM, paragraph 6; 
agreed minutes of conference call of 9 August 2019 with an end -customer providin g HPC services to 
universities and research centres, paragraph 13 ; and Intel’s submission of 10 September 2019 entitled 
“Intel response to case team’s questions”, question 4. b. 
51  See, for example, agreed minutes of conference call of 9 August 2019 with an  end-customer providing 
HPC services to universities and research centres, paragraph 14.   
 
 
14 Mellanox’s network interconnects that they have installed/equipped.52 For all 
datacentres equipped with InfiniBand fabrics, these OEMs confirmed that they had 
no suitable network interconnect alternatives. In particular, they confirmed that they 
did not see Ethernet -based network interconnects as suitable alternatives.  
(64) Third, several competitors and customers  having indicated that there are certain HPC 
applications for which only high performance fabrics are suitable further specified 
that even RoCE -enabled Ethernet solutions with a speed of 25 Gb/s or higher do not 
current ly achieve performance equivalent to InfiniBand in particular in terms of 
latency.53 These respondents explained that while RoCE -enabled Ethernet solutions 
may be suitable for low -end HPC applications that do not demand the highest 
performance levels offere d by high performance fabrics such as InfiniBand, these 
solutions do not currently constitute an alternative for a large number of other HPC 
applications and complex AI machine learning training work.  
(65) Fourth, Mellanox’s internal documents also [BUSINESS S ECRETS  – Information 
redacted regarding business strategy] .54 In addition, [BUSINESS SECRETS  – 
Information redacted regarding business strategy] . 
(66) Fifth, high performance fabrics differ from Ethernet -based network interconnects 
because they are sold almost e xclusively as integrated systems whereas Ethernet -
based network interconnects are typically sold as individual components. While 
customers sourcing Ethernet -based network interconnects have the possibility to 
mix-and-match between several different supplie rs (e.g., buying NICS from one 
supplier and switches from another ), this possibility is , in principle, not available for 
customers wanting to source high performance fabrics.  
(67) This is confirmed by Mellanox which explains that:  [BUSINESS SECRETS  – 
Informati on redacted regarding business strategy] .55  
(68) In addition, t he Commission  considers that there is only limited supply -side 
substitutability between Ethernet -based solutions and high performance fabrics, as 
shown by the following elements.  
(69) First, the results  of the market investigation show that there is no credible prospect 
that a competitor of Mellanox with Ethernet -based network interconnects woul d 
develop and start offering a high performance fabric that would be able to compete 
successfully with Mellanox ’s latest generation InfiniBand fabric within less than a 
year.56 Based on the replies from competitors, launching a competitive InfiniBand 
fabric or another type of high -performance fabric would take at least three years and 
would require costs significant ly higher than the Notifying Party’s estimate 
reproduced above . A number of competitors also mentioned Intel’s Omni -Path 
                                                 
52  Replies to Questionnaire Q2 to OEMs, question 29.  
53  See Replies to Questionnaire Q1 to Competitors, question 15.1; Questionnaire Q3 to End Customers, 
question 28 .1; Intel’s submission of 10 September 2019 entitled “Intel response to case team’s questions”, 
question 4.b.  
54  For example, Mellanox internal document, […], slides 4, 49 and 72; Mellanox internal document, […], 
slides 4, 39 and 62.  
55  Form CO, Annex RFI  3 – 0, paragraph 185. Mellanox only mentions […] standalone sales of InfiniBand 
products for repair purposes.       
56  Replies to Questionnaire Q1 to Competitors, question 24.2.  
 
 
15 failure as an example of the difficulty to enter the market for high performance 
fabrics.  
(70) Second, while certain respondents envisage t hat further technological progress may 
allow Ethernet -based network interconnect systems to become suitable alternative to 
high performance fab rics in the future, they  acknowledge that this is currently 
uncertain. In this respect , beyond Slingshot, which s ome end -customers considered 
as Ethernet -based, the majority of end -customers and competitors do not believe that 
a competing Ethernet fabric will emerge within the next 2 -3 years that would be able 
to compete successfully with InfiniBand.57 
(2) Segmentation wi thin h igh performance fabrics  
(71) Within high performance fabrics, the Commission has considered potential 
segmentations (i) between different protocols, (ii) between the various components 
composing high performance fabr ics and (ii i) based on bandwidth . 
(a) Distinction between protocols within high performance fabrics  
(72) The Commission has considered a further distinction within high performance 
fabrics based on protocols. In particular, the Commission has considered a potential 
separate relevant product market for InfiniBand high performance fabrics which 
could also potentially include Omni -Path given that this proprietary, high 
performance communication architecture developed and owned by Intel, is rooted 
from the InfiniBand technology Intel acquired from QLogi c in 2012.  
(73) Based on the results of the market investigation, there are indication that customers 
wanting to procure InfiniBand fabric would not consider any other alternative high 
performance fabrics (see above).  
(74) However, for the purpose of this decision , the question whether high performance 
fabrics should be further distinguished based on protocols can be left open since it 
does not materially change the Commission's assessment.  
(b) Distinction between individual components within high performance fabri cs 
(75) With respect to a potential distinction between individual components , as explained 
above, a key characteristic of high performance fabrics versus for example Ethernet -
based network interconnect systems is that fabrics are integrated systems of custom 
hardware designed to run on custom protocols and orchestrated by custom software. 
There is therefore only very limited or no interoperability between ind ividual 
components across the different custom protocols for  high performance. In addition,  
[…], the var ious components composing high performance fabrics are almost always 
sold together to final customers. This is also confirmed by several customers.58  
(76) Based on these elements, the Commission considers that there is no need to further 
distinguish high performance fabrics based on the individual components composing 
the fabrics.  
                                                 
57  Replies to Questionnaire Q1 to Competitors, question 38 ; Questionnaire Q3 to End Customers , question 
43. 
58  Replies to Questionnaire Q3 to End Customers, question 27.1.; Questionnaire Q2 to OEMs, question 16.1.  
 
 
16 (c) Distinction based on bandwidth within high performance fabrics 
(77) With respect to a potential distinction based on bandwidth, Mellanox currently offers 
InfiniBand interconnect solutions with a bandwidth of 100 Gb/s and 200 Gb/s.59 By 
contrast, other high performance fabrics currently only support speeds of 100 Gb/s.  
(78) The Commission’s market investigation confirm that bandwidth is an important 
parameter for the choice of network interconnect systems in particular in an HPC 
context.60 One large OEM selling solutions equipped with InfiniBand fabrics to a 
large number of end customers considers that InfiniBand customers typically specify 
the exact bandwidth they require.61 Another large OEM mentions that customers 
wanting to purchase InfiniBand typically expect to be offer ed the latest generation of 
this product with the highest bandwidth available.62  
(79) However, for the purpose of this decision, the question whether high performance 
fabrics should be further distinguished based on bandwidth can be left open as it 
does not materially change the Commission's assessment.  
(3) Segmentation within Ethernet-based network interconnects 
(80) The Commission has assessed a potential segmentation between the various 
components composing Ethernet-based network interconnects. For each individual 
component, the Commission has also assessed a potential sub-segmentation based  on 
bandwidth/speed.  
(a) Distinction between individual components 
(81) As explained above, in previous decisions, the Commission distinguished between 
the two main components of Fibre Channel SAN networks, i.e. switches and 
adapters (NICs). As regards switches, the Commission has previously considered a 
segmentation based on the different protocols and network technologies that they 
support.  
(82) In line with these precedents, the Commission considers that each of the main 
individual components composing Ethernet-based network interconnects – i.e., 
NICs, switches, and cables63 – constitute a separate product market. In particular, the 
Commission identifies a separate relevant product market for Ethernet NICs. This 
conclusion is based on the following elements. 
                                                 
59  In addition, in June 2019, Mellanox announced plans to launch a 400 Gb/s InfiniBand fabric (NDR) in 
2020 and a 1,000 Gb/s InfiniBand fabric (XDR) sometime thereafter (see: Mellanox, InfiniBand In-
Network Computing Technology and Roadmap, June 2019, available at 
http://www.mellanox.com/solutions/hpc/pdf/InfiniBnd ISC19 BoF.pdf  (at slide 7).  
60  See for example agreed minutes of conference call of 12 August 2019 with a large OEM, paragraph 6; 
agreed minutes of conference call of 9 August 2019 with an end-customer providing HPC services to 
universities and research centres, paragraph 13; and Intel’s submission of 10 September 2019 entitled 
“Intel response to case team’s questions”, question 4.b.  
61  Replies to Questionnaire Q2 to OEMs, question 26. 
62  Replies to Questionnaire Q2 to OEMs, question 26. 
63  Network interconnect systems also incorporate a software component. This interconnect software is 
however typically not sold as a separate product but it is provided as part of the hardware required to 
deploy interconnect solution (see Form CO, paragraph 329). Therefore, there is no need to consider a 
separate market for interconnect software.  
 
 
17 (83) First, as mentioned above, the Notifying Party acknowledges that a distinction 
between the components m aking up Ethernet -based network interconnects may be 
conceivable from a demand -side substitutability perspective.  
(84) Second, the results of the Commission’s market investigation confirm that the 
various components composing Ethernet network interconnect syste ms fulfil 
different functions and are not substitutable from the perspective of the customer. 
For example, a network interconnect supplier explains: “ Network interface Cards 
(NICs) are not a substitute for switches, and are not always sold together either” .64 
(85) Third, a large majority of end customers having expressed their views explained that 
they do not express a preference as to whether all components composing the 
network interconnect systems should be procured from one single supplier as a 
packaged syste m. Customers explain that they want to leave competition as open as 
possible.65 They would therefore typically not require that OEMs procure full 
Ethernet systems from one single supplier as long as OEMs guarantee the 
interoperability of the system. A number of customers also explain that they want to 
be able to select the best indiv idual components. For example, a customer explains 
that it evaluates each network component “ on its individual merit ”.66 
(86) Fourth, contrary to what is the case for components of high performance fabrics,  
OEMs also confirm that they source Ethernet network int erconnect components both 
on a standalone basis and as integrated systems.67 
(87) Fifth, from a supply -side perspective, there are clear limits to the transferability of 
know -how and technology between Ethernet switches and NICs. In the first place, 
while Mellan ox is a technology leader for Ethernet NICs which translates in high 
market shares for Ethernet NICs with a bandwidth speed of 25 Gb/s or higher, it 
does not hold a similarly strong position in Ethernet switches where its market share 
is [0-5]%.68 Conversel y, although Cisco is the world’s large st provider of Ethernet 
based network switches, based on the Notifying Party’s estimate it only has a market 
share of around [5-10]% in Ethernet NICs with a bandwidth speed of 25 Gb/s or 
higher. This is indicative of d ifferent market conditions and/or different technology 
requirements between the two main Ethernet network interconnect components, i.e., 
NICs and switches.  
(88) In the second place, a majority of competitors having expressed their view explain 
that a supplier of Ethernet NICs with a bandwidth speed below 25 Gb/s would need 
significant investment and time in order to develop and launch Ethernet NICs of 100 
Gb/s with RoCE capability that would be able to compete successfully with 
Mellanox’s ConnectX -6 100 Gb/s Et hernet NICs.69 Based on this feedback, the 
barrier to entry for a supplier only active in Ethernet switches and/or cables but not 
supplying NICs would be even higher.  
  
                                                 
64  See agreed minutes of conference call of 25 July 2019 with Cisco.  
65  Replies to Questionnaire Q3 to End C ustomers , questions 27.3 and 27.4.  
66  Replies to Question naire Q3 to End C ustomers , questions 27.3 and 27.4.  
67  Replies to Questionnaire Q2 to OEMs, questions 17 and 17.1.  
68  Notifying Party’s response to RFI 16.  
69  Replies to Questionnaire Q1 to Competitors, question 25.  
 
 
18 (b) Ethernet NICs of 25  Gb/s and higher vs. Ethernet NICs below 25  Gb/s  
(89) The term NIC genera lly refers to a network interface controller, which is a hardware 
adapter that allows a computer to communicate with a network. In normal datacentre 
applications, Ethernet NICs are primarily differentiated by the speed at which they 
can transfer data  (band width) , which is measured in gigabits per second. Ethernet 
NICs used in servers support speeds of 1, 10, 25, 50, 100 and now even 200 Gb/s.  
(90) As explained above at paragraph 46, in a previous decision, the Commission has 
already considered a distinction acc ording to bandwidth speed with respect to the 
SerDes (serializer/deserializer) intellectual property used in high -speed NICs.  
(91) In line with this precedent, based on its market investigation, the Commission finds 
that there is a separate product market for Ethernet NICs with a bandwidth speed of 
25 Gb/s or higher which is distinct from the market for Ethernet NICs with a 
bandwidth speed of less than 25 Gb/s. This conclusion is based on the following 
elements.  
(92) First, from the demand -side perspective, a large  majority of end customers and 
OEMs having expressed their views confirm that there are certain applications, 
performance needs, or mix of workloads for which customers would only consider 
Ethernet NICs of at least 25 Gb/s.70 For example, several customers reported that the 
need for bandwidth speed of at least 25 Gb/s is particularly acute for hyperscale71 
customers , i.e. mainly cloud service providers .72 
(93) With respect, specifically, to the possibility to use more 10 Gb/s NICs to achieve the 
performance of a 25  Gb/s, a customer explained that this would not be an optimal 
solution because: “ using less speed NIC for ex 10 Gbs will triple the amount of NICs 
wires and will entail use of more complex (port capacity) switches ”.73  
(94) Second, based on their recent procurem ent activity (last two years), all OEMs having 
expressed their views explained that when they delivered/installed GPU -accelerated 
servers connected with Mellanox Ethernet NICs of at least 25 Gb/s, the only other 
speeds that could also have been suitable we re higher speeds.74 One OEM notably 
explained that there may be some substitutability from the customer perspective 
between a given speed level and the level just below. However, this OEM further 
explained that this is only the case for speeds above 25 Gb/s . According to this 
OEM, while a customer willing to purchase 50 Gb/s NICs could potentially consider 
40 Gb/s NICs as a suitable alternative, a customer willing to purchase 25 Gb/s NICs 
would not consider NICs with a speed of 10 Gb/s.  
(95) Third, competitors a lso confirm that it is not credible to compete against Mellanox’s 
Ethernet NICs with a s peed of 25 Gb/s or more with Ethernet NICs with a speed of 
                                                 
70  Replies to Questionnaire Q3 to End C ustomers , questions 21 and 21.1; Questionnaire Q2 to OEMs, 
questions 22 and 22.1.  
71  Hyperscale computing refers to the facilities and provisioning required in distributed computing 
environments to efficiently scale from a few servers to thousands of server s. Hyperscale computing is 
usually used in environments such as big data and cloud computing.  
72  Replies to Questionnaire Q3 to End C ustomers , questions 21 and 21.1.  
73  Replies to Questionnaire Q3 to End C ustomers , questions 21 and 21.1.  
74  Replies to Ques tionnaire Q2 to OEMs, questions 25, 25.1, 25.2, 25.3 and 25.4.  
 
 
19 10 Gb/s. For example, a competitor explains: “ If an end -user has requested an 
Ethernet NIC of 25 Gb/s or abov e, [this competitor]  considers that it would not be 
possible to credibly compete with an Ethernet NIC of 10 Gb/s against any of the 
products listed under Questions 22.1 to 22.4.75 The reason is that the end -user would 
have an identified need that generally cannot be met by an Ethernet NIC of 10 
Gb/s ”.76  
(96) Fourth, Mellanox’s recent internal documents presented to the board [BUSINESS 
SECRETS – Information redacted regarding business st rategy] .77 This segment  
corresponds to NICs with a speed of 25 Gb/s or higher. Such a segment  is also 
discussed separately [BUSINESS SECRETS  – Information redacte d regarding 
business strategy] .78  
(97) In addition, the Parties’ internal documents  [BUSINESS SECRET S – Information 
redacte d regarding business strategy] describe and discuss what th e Parties identified  
as [BUSINESS SECRETS  – Information redacte d regarding business strategy] .79 In 
particular , NVIDIA noted that this [BUSINESS SECRETS  – Information redacte d 
regarding business strategy] .80   
(98) Fifth, from a supply -side perspective, a majority of c ompetitor s consider that there 
are significant barriers in terms of time and costs for a supplier of Ethernet NICs 
with a bandwidth speed below 25 Gb/s to develop and l aunch Ethernet NICs of 100 
Gb/s with RoCE capability that would be able to compete successfully with 
Mellanox’s ConnectX -6 100 Gb/s Ethernet NICs.81 Intel also explains that whereas 
there might be supply -side substitution between 25  Gb/s and higher bandwidt h, 
“[t]he 25 Gbps technology is foundational to higher Ethernet speeds, as the 50 Gbps 
and 100 Gbps Ethernet NICs achieve their speeds through multiple 25 Gbps 
lanes ”.82 
(c) Other Ethernet components  (switches and cables)  
(99) Ethernet switches and Ethernet cables could potentially be further segmented based 
on bandwidth  between switches and cables of 25  Gb/s and higher on the one hand 
and switches and cables below 25  Gb/s .  
(100)  However, for the purpose of this decision the precise product market definition can 
be left open, as the Transaction does not raise serious doubts as to its compatibility 
with the internal market or the functioning of the EEA Agreement with regard to 
Ethernet switches and Ethernet cables, and any segments therein, under any plausible 
market defin ition.  
                                                 
75  Mellanox ConnectX Ethernet NICs of 25 Gb/s, Mellanox ConnectX Ethernet NICs of 50 Gb/s,  Mellanox 
ConnectX Ethernet NICs of 100 Gb/s, and Mellanox ConnectX Ethernet NICs of 200 Gb/s.  
76  Repli es to Questionnaire Q1 to Competitors, question 22 and sub -questions.  
77  E.g., Mellanox internal documents […] , slides 7 and 8; […], slides 69 -78; […], slides 49 -50. 
78  E.g., Form CO, Annex 5.4(ii) – 04, […], slides 3 and 5.  
79  E.g., Mellanox internal doc ument, […], pages 29 -30; NVIDIA internal document, Form CO Annex 5.4(ii) 
– 03, […].  
80  NVIDIA internal document, Form CO, Annex 5.4(ii) – 03, […]. 
81  Replies to Questionnaire Q1 to Competitors , question 25  
82  Intel’s non -confidential submission of 11 September 2019, entitled “Intel responses to case team’s 
questions”, page 18  
 
 
20 (4) Conclusion  
(101)  The Commission considers that there are two distinct product markets for (i) high 
performance fabrics and (ii) Ethernet -based network interconnects.  
(102)  Within the market for high performance fabrics, the Commission does not consider a 
furth er segmentation based on (a) different components meaningful. The question 
whether high performance fabrics should be further segmente d based on (b) 
protocols or (c) bandwidth/speed can be left open , since any such further 
segmentation would  not materially  change the Commission's assessment  in this case . 
(103)  As for the Ethernet -based interconnects, the Commission considers that each of the 
main individual components composing Ethernet -based network interconnects – i.e., 
NICs, switches, and cables – constitute s eparate product markets. In particular, the 
Commission identifies a separate relevant product market for Ethernet NICs. The 
Commission considers that this market should be further segmented in a separate 
product market for Ethernet NICs with a bandwidth sp eed of 25 Gb/s or higher, 
which is distinct from the market for Ethernet NICs with a bandwidth speed of less 
than 25 Gb/s. Finally, for the purpose of this decision, the precise product market 
definition for Ethernet switches and Ethernet cables, as well a s the question whether 
these markets should be further segmented, can be left open, as the Transaction does 
not raise serious doubts as to its compatibility with the internal market under any 
market that the Commission considers plausible . 
4.3.3.  Geographi c market definition  
(104)  In previous decisions, the Commission has considered that the geographic market for 
all categories of network  interconnect  products (including IP/Ethernet switches and 
routers) to be either EEA -wide or worldwide in scope.83 In Broadcom/ Brocade ,84 
respondents to the market investigation unanimously consider ed that the geographic 
market for IP/Ethernet switches and routers was worldwide given the global nature 
of both supply and demand.  
(105)  The Notifying Party submits that the relevant geograp hic market for datacentre 
network interconnects should be defined as worldwide.85 This should remain the 
case even for potentially narrower product markets.86 
(106)  The majority of competitors, OEMs and end customers that replied to the market 
investigation confir med that network interconnects are supplied on a worldwide 
basis, irrespective of the location of the component vendor or the location of the end -
customer.87 Moreover, the majority of competitors and the large majority of end 
                                                 
83  Commission decision of 12 April 2017 in case M.8314 – Broadcom/Brocade , paragraphs 58. Commission 
decision of 19 September 2008 in case M.5300 – Gores Group/Siemens Enterprise Communications , 
paragraph 14.  
84  Commission decision of 12 April 2017 in case M.8314 – Broadcom/Brocade , paragraphs 59.  
85  Form CO, paragraph 360.  
86  Form CO, paragraph 367.  
87  Replies to Questionnaire Q1 to Competitors, questions 28 and 28.1; Questionnaire Q2 to OEMs, questions 
32 and 32.1; Questionnaire Q3 to End Customers, questions 30 and 30.1.  
 
 
21 customers that expressed a view confirmed that the conditions of competition do not 
differ depending on the location of the datacentre of the end customer.88 
(107)  In light of the results of the market investigation, for the purposes of this decision, 
the Commission considers that the geographic scope of the various markets for 
network interconnect products is worldwide. 
4.4. Datacentre servers 
4.4.1. Introduction 
(108)  Datacentres are a collection of servers that are connected by a network and that work 
together to process/compute workloads. As such, servers are the computing power of 
datacentres.89 They typically contain CPUs, network interconnects and optional 
accelerators together in a system. 
(109)  NVIDIA offers a family of server systems (DGX-1, DGX-2 and DGX-Station) that 
perform GPU-accelerated AI and deep learning (“ DL”) training and inference 
applications, among others. The main building block of the DGX servers is HGX, 
which combines a number of NVIDIA GPUs, connected with NVLINK and 
NVSwitches, enabling them to function as a single unified accelerator.90 GDX-1 
contains the HGX-1, a board with eight Tesla V100 GPUs, Core Intel Xeon CPUs, 
and four InfiniBand NICs. DGX-2 contains the HGX-2, which includes 16 NVIDIA 
Tesla V100 GPUs, dual-socket Intel Xeon CPUs, and eight InfiniBand NICs.91 
(110)  Accordi ng to the Notifying Party, the DGX family is a “reference architecture” 
platform for NVIDIA to continue to innovate and demonstrate GPU innovations to 
server OEMs/ODMs, thereby generating demand for its GPUs. NVIDIA provides 
that innovation and the building blocks of its DGX servers to OEMs, ODMs and 
CSPs to use in their own server offerings. In addition, NVIDIA offers DGX servers 
for sale, but, according to the Notifying Party, these servers are not intended to 
displace any sales from NVIDIA’s OEM/ODM part ners.92 
4.4.2. Product market definition 
4.4.2.1.Commission precedents 
(111)  In past decisions, the Commission has considered a segmentation of datacentre 
servers by price band: (a) entry level (below USD 100 000), (b) mid-range (USD 
                                                 
88  Replies to Questionnaire Q1 to Competitors, questions 29 and 29; Questionnaire Q3 to End Customers, 
questions 31 and 31.1. 
89  Commission Decision of 29 February 2016 in case M.7861 – Dell/EMC , paragraph 38. 
90  Notifying Party’s response to RFI 5 , question 7. 
91  Form CO, paragraph 179. See also https://www.nvidia.com/content/dam/en-zz/Solutions/Data-
Center/dgx-1/dgx-1-print-infographic- 738238-nvidia-web.pdf  and 
https://www nvidia.com/content/dam/en-zz/Solutions/Data-Center/dgx-1/dgx-2-datasheet- us-nvidia-
955420- r2-web-new.pdf .  
92  Form CO, paragraphs 32 and 179; see also Notifying Party’s response to RFI 5, question 7. 
 
 
22 100 000 – USD 999 999), and (c) high -end (US D 1 million and above). The 
Commission ultimately left the product market decision open.93 
(112)  In Dell/EMC , the Commission noted that the market investigation did not provide a 
clear result as to a possible segmentation of datacentre servers by operating system s 
or by the applications they serve.94 
4.4.2.2.  Notifying Party’s views  
(113)  The Notifying Party considers that the relevant product market should encompass all 
datacentre servers.95 However, in this case, the precise product market definition can 
be left open.96 
(114)  First, according to the Notifying Party, all datacentre servers have the same 
functions: they are used to process data in the datacentre, which can be achieved 
with differently priced servers. However, if a further division of the market for 
datacentre mar ket were necessary, the Notifying Party submits that a segmentation 
according to price band would be the most sensible, as it would be in line with the 
Commission’s precedents. In that situation, the Notifying Party considers that 
NVIDIA’s DGX servers woul d belong to the potential market for mid -range 
servers.97 
(115)  Second, the Notifying Party argues that the market for datacentre servers 
should not be segmented according to the particular workloads they serve because (i) 
suppliers do not know which applications  end-customers will accelerate with their 
server and (ii) there is no workload that only a highly accelerated server (such as 
NVIDIA’s DGX server) could handle.98 
4.4.2.3. Commission’s assessment  
(116)  The Commission has considered whether the market for datacentre server s could be 
further segmented according to price bands or to the applications/end uses for which 
the datacentre servers are designed or used. During the market investigation, these 
possible market segmentations were tested.  
(117)  First, the market investigation regarding a possible segmentation according to price 
bands provided mixed views. While a number of respondents considered that this 
segmentation was appropriate, others disagreed with it. For example, a few 
respondents indicated that such segmentation is  “typically used ” or is “ quite 
common ” and “ similar to what IDC provides ”.99 However, Tech Data Europe 
(OEM) explained that “ it is not necessary to define segments as narrowly as high -
end, mid -range and low -end servers, as customers switch between servers of 
                                                 
93  Commission decision o f 29 February 2016 in case M.7861 – Dell/EMC , paragraphs 38 -42 and 45; 
Commission decision of 21 January 2010 in case M.5529 – Oracle/Sun Microsystems , recital 941; 
Commission decision of 31 January 2002 in case M.2609 – HP/Compaq , paragraphs 20 -22. 
94  Commission decision of 29 February 2016 in case M.7861 – Dell/EMC , paragraph 42.  
95  Form CO, paragraph 352.  
96  Form CO, paragraph 359.  
97  Form CO, paragraphs 404 -407. 
98  Form CO, paragraph 355.  
99  Replies to Questionnaire Q3 to End Customers, questions 32. 1 and 32.1.1.  
 
 
23 different types, and distributors typically sell all types ”.100 Similarly, HPE stated that 
“[t]here are many different reasons that a server may be prices in a certain way and 
all servers in a similar price bands are not substitutes for one another ”.101 
(118)  Second , the majority of the respondents to the market investigation that expressed a 
view did not consider that a segmentation of datacentre servers based on the 
applications/end use they serve is appropriate.102 For example, an OEM explained 
that “a segmentation by type of application is not appropriate as servers may be 
used across multiple applications and customers usually do not request significantly 
different types of servers based on the use -case. ”103 Similarly, an end customer 
indicated that “ any size [of ser vers] can serve any applications ”.104 Moreover, some 
of the respondents that expressed a view listed a number of suppliers offering 
alternatives to NVIDIA’s DGX servers, including, for example, HPE, IBM, Dell, 
Intel, Atos and Lenovo.105 Finally, competitors su ch as Oracle and IBM confirmed 
that it would be relatively easy for them to start supplying datacentre servers offering 
the same level of performance or that would be suitable for the applications/end uses 
for which DGX servers are used.106 
(119)  In light of the a bove, the Commission considers that  the market for datacentre 
servers should not be segmented according to the applications/end uses for which the 
datacentre servers are designed or used. In addition, the Commission considers that , 
for the purpose of this decision, it can be left open whether the market for datacentre 
servers should be further segmented according to price bands , as the Transaction 
does not raise serious doubts as to its compatibility with the internal market in any 
plausible product markets , even in a plausible mid -range server market where 
NVIDIA’s position would be stronger.  
4.4.3.  Geographic market definition  
(120)  In past decisions, the Commission found the market for datacentre servers to be at 
least EEA -wide if not worldwide.107 
(121)  The Notifying Party submits that the relevant geographic market for datacentre 
servers should be defined as worldwide.108 This should remain the case even for a 
potentially narrower product market for mid -range servers .109  
                                                 
100  Tech Data Europe GmbH’s reply to Questionnaire Q2 to OEMs, question 34.1.1.  
101  Replies to Questionnaires Q2 to OEMs , question 34.1 .; Questionnaire Q3 to End Customers, question 
32.1.  
102  Replies to Questionnaires Q2 to OEMs , question 34.2.;  Questionnaire Q3 to End Customers, question 
32.2.  
103  Replies to Questionnaire Q2 to OEMs , question 34.2.1.  
104  Replies to Questionnaire Q3 to End C ustomers , question 32.2.1.  
105  Replies to Questionnaire Q2 to OEMs , questions 36.1 and 36.2; Questionnaire Q3  to End C ustomers , 
question 33.3.  
106  Replies to Questionnaire Q2 to OEMs , question 36.3.  
107  Commission decision of 29 February 2016 in case M.7861 – Dell/EMC , paragraph 44; Commission 
decision of 21 January 2010 in case M.5529 – Oracle/Sun Microsystems , recitals 941 and 950; 
Commission decision of 31 January 2002 in case M.2609 – HP/Compaq , paragraph 23.  
108  Form CO, paragraph 360.  
109  Form CO, paragraph 367.  
 
 
24 (122)  The results of the market investigation indicate  that the geographic scope of the 
market for datacentre servers is most likely worldwide.110 A number of OEMs 
confirmed that they sell datacentre servers worldwide. Moreover, OEM respondents 
explained that “[t] there are few country -specific reasons which would prevent us 
from looking at the market global ”, “[t] transport costs are low ” and “ prices are 
similar or identical and customers procure servers on an EEA -wide or even 
worldwide level ”.111 Similarly, end custo mers confirmed that “ clients are 
international ” and that the servers they use are made available worldwide by global 
suppliers.112 
(123)  In light of the results of the market investigation, for the purposes of this decision, 
the Commission considers that the geogr aphic scope of the datacentre server markets 
(including a potential market for mid -range servers) is worldwide.  
5. COMPETITIVE ASSESSMEN T 
5.1. Analytical framework  
(124)  Under Article 2(2) and (3) of the Merger Regulation  and Annex XIV to the EEA 
Agreement , the Com mission declares  a proposed concentration incompatible with 
the internal market and with the functioning of the EEA Agreement if that 
concentration would significantly impede effective competition in the internal 
market or in a substantial part of it, in p articular through the creation or 
strengthening of a dominant position.  
(125)  Under Article 57(1) of the EEA Agreement, the Commission declares a proposed 
concentration incompatible with the EEA Agreement if that transaction creates or 
strengthens a dominant pos ition as a result of which effective competition would be 
significantly impeded within the territory covered by the EEA Agreement or a 
substantial part of it.  
(126)  In this respect, a merger may entail horizontal and/or non -horizontal effects. 
Horizontal effects  are those deriving from a concentration where the undertakings 
concerned are actual or potential competitors of each other in one or more of the 
relevant markets concerned. Non -horizontal effects are those deriving from a 
concentration where the undertaki ngs concerned are active in different relevant 
markets.  
(127)  The Commission appraises non -horizontal effects in accordance with the guidance 
set out in the relevant notice, that is to say the Non -Horizontal Merger Guidelines.113 
(128)  As regards non -horizontal mergers,  two broad types of such mergers can be 
distinguished: vertical mergers and conglomerate mergers.114 Vertical mergers 
                                                 
110  Replies to Questionnaires Q2 to OEMs, question 38; Questionnaire Q3 to End Customers, question 35.  
111  Replies to Questionnaires Q2 to OEMs, questions 38 and 38.1  
112  Replies to Questionnaire Q3 to End Customers, questions 35 and 35.1.  
113  Guidelines on the assessment of non -horizontal mergers under the Council Regulation on the control of 
concentrations between undertakings ("Non -Horizontal Merger Guidelines"), OJ C 265, 18.10.2008, p. 6 -
25. 
114  Non-Horizontal Merger Guidelines, paragraph 3.  
 
 
25 involve companies operating at different levels of the supply chain.115 Conglomerate 
mergers are mergers between firms that are in a relations hip that is neither horizontal 
(as competitors in the same relevant market) nor vertical (as suppliers or 
customers).116 
(129)  In this particular case, the Transaction does not give rise to any horizontal overlaps 
between the Parties' activities, but results in a vertical and a conglomerate 
relationship. Accordingly, the Commission will only examine whether the 
Transaction is likely to give rise to non -horizontal effects.  In particular, the 
Commission will assess potential conglomerate and vertical effects.  
5.2. Conglomerate non -coordinated effects  
(130)  NVIDIA and Mellanox are active in closely related markets. They both supply 
components used in datacentres or server clusters, in particular those used for HPC. 
NVIDIA’s discrete datacentre GPUs equip servers that constit ute certain (parts of) 
datacentres (also referred to as GPU -accelerated server clusters) to accelerate a 
number of applications, typically computations that require massive parallel 
execution of relatively simple computational tasks. They are necessarily u sed side -
by-side with CPUs, which are always present in datacentre servers. Servers within 
datacentres are connected to each other through network interconnect solutions, 
offered among others by Mellanox, and composed of network cables, connecting the 
NICs  within servers to network switches. NVIDIA’s discrete datacentre GPUs and 
Mellanox’s network interconnect solutions are therefore complementary 
components . which can be purchased  directly or indirectly via OEMs/ODMs  by the 
same set of customers for the sa me end use (HPC datacentres).  
(131)  In this decision, the Commission carries out three assessments as regards the 
conglomerate relationships identified above.  
(132)  The first assessment consists in determining whether the Transaction would likely 
confer on the Merged  Entity the ability and incentive to leverage Mellanox’s 
potentially strong market position in both the market for high -performance fabric 
(with its InfiniBand fabric) and in the market for Ethernet NICs of at least 25 Gb/s 
into the discrete datacentre GPU  market, and whether this would have a significant 
detrimental effect on competition in the discrete datacentre GPU market, thus 
causing harm to customers.  
(133)  The second assessment consists in determining whether the Transaction would likely 
confer on the Me rged Entity the ability and incentive to leverage NVIDIA’s 
potentially strong market position in the discrete datacentre GPU market into any 
possible network interconnect markets, and whether this would have a significant 
detrimental effect on competition in the network interconnect markets, thus causing 
harm to customers. This assessment is done overall, rather than for each potential 
network interconnect product market that could potentially be the target of the 
Merged Entity’s leveraging strategy. This i s because most of the competitive 
assessment is similar irrespective of the exact network interconnect product. The 
only difference relates to the assessment of the Merged Entity’s incentive. The 
                                                 
115  Non-Horizontal Merger Guidelines, paragraph 4.  
116  Non-Horizontal Merger Guidelines, paragraph 5.  
 
 
26 Commission will consider the various interconnect products w hen assessing the 
Merged Entity’s incentive.  
(134)  The third assessment consists in determining whether the Merged Entity would 
likely have the ability and incentive to misuse commercially sensitive information 
that it obtains from competing GPU and network inte rconnect suppliers (in the 
context of cooperation with these competitors to ensure interoperability of their 
respective products) to favour its own position on the discrete datacentre GPU and/or 
network interconnects relevant markets.  
5.2.1.  Legal framewo rk 
(135)  According to the Non -Horizontal Merger Guidelines, in most circumstances, 
conglomerate mergers do not lead to any competition problems.117 
(136)  However, foreclosure effects may arise when the combination of products in related 
markets may confer on the merged entity the ability and incentive to leverage a 
strong market position from one market to another closely related market by means 
of tying or bundling or other exclusionary practices. 118 
(137)  In assessing the likelihood of conglomerate effects, the Commission exa mines, first, 
whether the merged firm would have the ability to foreclose its rivals, second, 
whether it would have the economic incentive to do so and, third, whether a 
foreclosure strategy would have a significant detrimental effect on competition. In 
practice, these factors are often examined together as they are closely intertwined.119 
(138)  Mixed bundling refers to situations where the products are also available separately, 
but the sum of the stand -alone prices is higher than the bundled prices.120 Tying 
refers  to situations where customers that purchase one good (the tying good) are 
required also to purchase another good from the producer (the tied good). Tying can 
take place on a technical or contractual basis.121 Tying and bundling as such are 
common practices that often have no anticompetitive consequences. Nevertheless, in 
certain circumstances, these practices may lead to a reduction in actual or potential 
rivals’ ability or incentive to compete. Foreclosure may also take more subtle forms, 
such as the degrad ation of the quality of the standalone product.122 This may reduce 
the competitive pressure on the Merged Entity  allowing it to increase prices.123 
(139)  In order to be able to foreclose competitors, the merged entity must have a 
significant degree of market power, which does not necessarily amount to 
dominance, in one of the markets concerned. The effects of bundling or tying can 
only be expected to be substantial when at least one of the merging parties’ products 
is viewed by many customers as particularly importan t and there are few relevant 
alternative s for that product.124 Further, for foreclosure to be a potential concern, it 
                                                 
117  Non-Horizonta l Merger Guidelines, paragraph 92.  
118  Non-horizontal Merger Guidelines, paragraph 93.  
119  Non-horizontal Merger Guidelines, paragraph 94.  
120  Non-horizontal Merger Guidelines, paragraph 96.  
121  Non-horizontal Merger Guidelines, paragraph 97.  
122  Non-horizontal  Merger Guidelines, paragraph 33.  
123  Non-horizontal Merger Guidelines, paragraph 93.  
124  Non-horizontal Merger Guidelines, paragraph 99.  
 
 
27 must be the case that there is a large common pool of customers, which is more 
likely to be the case when the products are complementary.125  
(140)  The incentive to foreclose rivals through bundling or tying depends on the degree to 
which this strategy is profitable.126 Bundling and tying may entail losses or foregone 
revenues for the merged entity.127 It may also increase profits by gaining market 
power in the tied goods market, protecting market power in the tying good market, 
or a combination of the two.128  
(141)  It is only when a sufficiently large fraction of market output is affected by 
foreclosure resulting from the concentration that the concentration may  significantly 
impede effective competition. If there remain effective single -product players in 
either market, competition is unlikely to deteriorate following a conglomerate 
concentration.129 The effect on competition needs to be assessed in light of 
count ervailing factors such as the presence of countervailing buyer power or the 
likelihood that entry would maintain effective competition in the closely related 
markets concerned .130  
5.2.2.  Affected markets  
(142)  NVIDIA is active in the discrete datacentre GPU marke t, while Mellanox is active in 
the various network interconnect markets (depending on the exact segmentation) 
which are neighbouring markets closely related to the discrete datacentre GPU 
markets.  
(143)  Table 1 below  presents NVIDIA’s and its competitors’ market  shares on a 
worldwide market for discrete datacentre GPUs from 2016 to 2018. It follows that 
NVIDIA has a market share of [90-100]%. Mellanox is active in various network 
interconnect markets that are neighbouring markets closely related to the discrete 
datacentre GPU market. As a result, the discrete datacentre GPU market as well as 
all possible relevant network interconnect markets are affected.  
Table 1: Value market shares in discrete datacent re GPUs, worldwide, 2016 -2018 
Vendor  2016  2017  2018  
NVIDIA  [90-100]% [90-100]% [90-100]% 
AMD  [0-5]% [0-5]% [5-10]% 
Total  100%  100%  100%  
Source: IDC, NVIDIA actual sales data  
(144)  Currently, NVIDIA has only one competitor (AMD) in the discrete datacentre GPU 
market, which has so far only managed to gain [5-10]% market share in 2018 (see 
Table 1  above). However, according to the Notifying Party, the discrete datacentre 
                                                 
125  Non-horizontal Merger Guidelines, paragraph 100.  
126  Non-horizontal Merger Guidelines, paragraph 105.  
127  Non-horizonta l Merger Guidelines, paragraph 106.  
128  Non-horizontal Merger Guidelines, paragraph 108.  
129  Non-horizontal Merger Guidelines, paragraph 113.  
130  Non-horizontal Merger Guidelines, paragraph 114.  
 
 
28 GPU market is characterised by two major, recent developments, that are radically 
transforming its competitive dynamics. 
(145)  The first is the rise of AMD. A long-time participant in the GPU segment for gaming 
GPUs, AMD is leveraging its gaming Radeon GPU architecture for datacentre 
GPUs. In November 2018, AMD launched a new discrete datacentre GPU model: 
Radeon Instinct , which competes directly with NV IDIA’s datacentre GPUs. At the 
same time, AMD announced an ambitious product roadmap including the next 
Instinct generation as well as a commitment to on- going launches at a “ predictable 
cadence with generational performance gains. ”131 AMD’s emergence as a s trong 
competitor is evidenced by its recent successes at the top-levels of HPC computing. 
For instance, AMD announced that the upcoming Frontier datacentre  at Oak Ridge 
National Laboratory will rely on AMD’s Radeon Instinct GPUs (and AMD EPYC 
CPUs). This will be the fastest datacentre in the world when it comes online in 2021 
– and will run scientific, AI, and data analytics workloads. Beyond this success, 
AMD has also recently announced other top-end datacentre wins, including 
European datacentres.132 
(146)  The second is the entry of Intel. As explained by Intel, Intel is developing a new 
GPU to compete with NVIDIA’s GPUs for computational workloads in datacentres. 
Intel intends to enter in two stages. It plans to release a discrete GPU for graphics 
rendering workloads on PCs in 2020. Intel expects that this product, which will be 
the first new entry into the GPU market in nearly two decades, will also have limited 
deployment in datacentres. Intel plans to follow that with the release in 2021 of a 
discrete datacentre GPU designed specifically for computational uses in servers (also 
known as a “GPGPU”, short for general purpose GPU).133 According to the 
Notifying Party, Intel’s entry as a credible competitor of NVIDIA is evidenced by its 
recent win in the tender organised by the U.S. Department of Energy for the 
upcoming Aurora datacentre  at Argonne National Laboratory. This will be one of 
the fastest datacentres in the world by 2021 when it comes online. The U.S. 
Department of Energy reportedly selected Intel Xe GPUs (and Intel Xeon CPUs).134 
(147)  Tables 2 and 3 below present Mellanox’s and its competitors’ market shares in the 
market for Ethernet network NIC s with a bandwidth of at least 25 Gb/s and in the 
market for high-performance fabric (where Mellanox is active with its InfiniBand 
fabric). 
  
                                                 
131 See D. Wang, “AMD Next Horizon”, available at 
https://www.amd.com/system/files/documents/next horizon david wang presentation.pdf . 
132  Lawrence Livermore National Lab (USA), NERSC (USA), the High-Performance Computing Center of 
the University of Stuttgart (Germany), the CSC – IT Center for Science Ltd (Finland), as well as Eni 
S.p.a. (Italy). See the Notifying Party’s response to RFI 1, paragraph 184; Replies to Questionnaire Q3 to 
end customers, question 50.1.1. 
133  Intel’s submission of 10 September 2019 entitled “Intel response to case team’s query regarding 
foreclosure mechanism resulting from NVIDIA’s acquisition of Mellanox”, page 1.  
134  Form CO, paragraph 500. 
 
 
29 Table 2: Value market shares in datacentre Ethernet network NICs with a bandwidth 
of at least 25 Gb/s, worldwide, 2016 -2018  
Vendor  2016  2017  2018  
Mellanox  [70-80]%  [60-70]%  [60-70]%  
Intel [5-10]% [10-20]% [10-20]% 
Broadcom  [0-5]% [5-10]% [5-10]% 
Cisco  [5-10]% [5-10]% [5-10]% 
Solarflare  [0-5]% [0-5]% [0-5]% 
QLogic  [0-5]% [0-5]% [0-5]% 
Chelsio  [0-5]% [0-5]% [0-5]% 
Total  100%  100%  100%  
Source: CREHAN, Mellanox actual sales data  
Table 3: Market shares in high performance fabric, worldwide, 2016 -2018135 
Vendor  2016  2017  2018  
Mellanox  [60-70]%  [60-70]%  [60-70]%  
Intel [20-30]% [20-30]% [20-30]% 
Cray  [5-10]% [10-20]% [10-20]% 
Bull [0-5]% [0-5]% [0-5]% 
Other  [0-5]% [0-5]% [0-5]% 
Total  100%  100%  100%  
Source: TOP 500 lists (June 2017, June 2018, June 2019)  
(148)  As can be seen from Tables 2 and 3 above , Mellanox has a market share of [60-70]% 
in the market for high -performance fabric (with its InfiniBand fabric) and of [60-
70]% in the market for Ethernet NICs of at least 25 Gb/s. In all  other plausible 
network interconnect market segments, Mellanox’s market share is low and in any 
event significantly lower than 30%.136 As NVIDIA is active in the discrete 
                                                 
135 The Parties were unable to provide value market sha res on a high performance fabric market, because 
CREHAN does not report sales data on such a market. Therefore, the Parties provided estimated market 
shares based on a count of the number of supercomputers equipped with each interconnect protocol, 
excludin g Ethernet, in the TOP 500 lists. The TOP 500 lists are produced bi -annually, in June and in 
November. The Parties originally provided the shares of supercomputers equipped with each interconnect 
non-Ethernet protocol in the November lists of 2016, 2017 an d 2018, to reflect the share at the end of each 
corresponding year. However these shares represent the share of each non -Ethernet protocol in the 
installed base of each list rather than the shares of each non -Ethernet protocol in the number of 
installation s made in a given year. Therefore, the Commission reiterated the calculation of market shares 
based on the TOP 500 lists focusing only on the installations of a given year. For each year t, in order to 
cover the entire year, the Commission used the June t+ 1 list (e.g. June 2019 list to calculate shares for the 
year 2018) and calculated the share of each non -Ethernet protocol among those supercomputers of this list 
that were installed in year t.  
136  Mellanox’s market share at the worldwide level is [0-5]% in a possible market for Ethernet switches, [0-
5]% in a possible market for Ethernet switches of at least 25 Gb/s, and [0-5]% in a possible market for 
Ethernet switches below 25 Gb/s.  
 No public data exist for the market for Ethernet cables. Therefore the Pa rties could not provide estimates 
of Mellanox’s market share on Ethernet cable markets. However, the Parties submit that Mellanox’s 
 
 
 
30 datacentre GPU market, which is closely related to both the markets for high -
performan ce fabric and for Ethernet NICs of at least 25 Gb/s, it can be concluded 
that both the discrete datacentre GPU market as well as the markets for high -
performance fabric and for Ethernet NICs of at least 25 Gb/s are affected.  
5.2.3.  Leveraging the position of Mell anox in the markets for high -performance fabric and 
for Ethernet NICs of at least 25 Gb/s into the discrete datacentre GPU market where 
NVIDIA is active  
5.2.3.1. Potential concern  
(149)  The Commission has assessed a potential competition concern whereby the Merged 
Entity  would leverage Mellanox’s potentially strong position in the plausible 
markets for high performance fabric and for Ethernet NICs of at least 25 Gb/s, into 
the market for discrete datacentre GPUs where NVIDIA is active and thereby 
foreclose competitors  on the discrete datacentre GPUs  market , thus causing harm to 
customers.  
(150)  The Commission has assessed in particular the ability and the incentive of the 
Merged Entity  to engage in the following tying/bundling practices:  
 technical tying: differentiating the de gree of technical compatibility and 
therefore overall performance of the Merged Entity’s  joint solution compared 
to mix -and-match solutions involving only one of its products; and/or  
 contractual tying: imposing the purchase of NVIDIA GPUs if the customer 
wants to purchase Mellanox’s InfiniBand fabric and/or Ethernet NICs of at 
least 25 Gb/s; and/or  
 mixed bundling: incentivising the joint purchase of the Merged Entity’s  own 
products by offering higher prices for mix-and-match solutions involving 
only one of  its products as compared to the bundle.  
(151)  Both AMD137 and Intel raised concerns that they may be foreclosed from the discrete 
datacentre GPU markets due to one or a combination of the three practices described 
above. In particular, Intel claims that, for dema nding HPC and AI deep learning 
training server deployments, customers require their servers to be connected with a 
high performance fabric and/or Ethernet NICs of at least 25 Gb/s and that customers 
do not have credible alternatives to Mellanox.138 
(152)  The Commi ssion has assessed specifically whether the Merged Entity  would have 
the ability and incentive to foreclose enough discrete datacentre GPU market output 
to hinder Intel’s effective long -term entry and AMD’s expansion into the discrete 
datacentre GPU market .  
                                                                                                                                                      
market shares on a market for datacentre Ethernet cables, on a market for datacentre Ethernet cables of at 
least 25 Gb/s, an d on a market for datacentre Ethernet cables below 25 Gb/s are well below 30%.  
 Finally, Mellanox’s market share at the worldwide level in a plausible market for Ethernet NICs below 25 
Gb/s is [0-5]%. See Notifying Party’s response to RFI 16.  
137  Agreed minutes of the conference call of 9 August 2019 with AMD.  
138  Intel’s submission of 10 September 2019 entitled “Intel response to case team’s questions”, question 7. 
 
 
31 (153)  The reason why the Commission has assessed the potential leveraging from two 
distinct markets together is that GPU -accelerated servers, depending on the 
requirements of the end -customers, are in practice connected with various types of 
interconnect solu tions. In particular, some GPU -accelerated server clusters are 
connected with high -performance fabrics (including Mellanox’s InfiniBand fabric), 
while others are connected with Ethernet network interconnect solutions composed 
among others of NICs of differ ent speeds, including 25 Gb/s and above. NICs are 
particularly important as far as interoperability between GPUs and the overall 
network interconnect is concerned, because NICs are the piece of hardware allowing 
the various servers within a datacentre to c ommunicate with each other. When 
servers are accelerated with GPUs, NICs may need to interact directly with GPUs.  
5.2.3.2. Notifying Party’s view  
(154)  The Notifying Party submits that the Merged Entity  will not have the ability and 
incentive to leverage Mellanox’s pote ntially strong market position in any plausible 
markets into the market for discrete  datacentre GPUs where NVIDIA is active. In 
any event, the Notifying Party submits that any putative leveraging could not lead to 
anticompetitive foreclosure of NVIDIA’s ri vals. The reasons are the following.  
(1) As regards ability  
(a) As regards Mellanox’s alleged market power  
(155)  First, the Notifying Party argues that the Merged Entity  will not have the ability to 
anticompetitively leverage Mellanox’s market position post -Transaction,  because 
Mellanox lacks market power in the supply of network interconnect products. Even 
in the narrow market segments identified in Section 4 .3.2. which are limited to (i) 
high performance interconnect fabrics, and (ii) Ethernet NICs with a data speed of  
25 Gb/s or higher, the Notifying Party argues that Mellanox is subject to strong 
competitive constraints.  
– As regards Mellanox’s InfiniBand fabric  
(156)  In the first place, the Notifying Party argues that Mellanox’s InfiniBand fabric is 
subject to significant co mpetitive constraints from other high -performance fabrics, 
such as Intel’s Omni -Path, Cray’s Aries, Gemini and Slingshot, and Fujitsu’s Tofu . 
In particular, the Notifying Party argues that Cray’s Slingshot fabric will compete 
strongly with InfiniBand in th e foreseeable future.  Also, according to the Notifying 
Party, while Intel has discontinued the next generation of Omni -Path, it is 
maintaining support for the existing products and Mellanox expects that it will 
continue to exercise real constraint for at l east the next two years.  
(157)  In the second place, the Notifying Party argues that Mellanox’s InfiniBand fabric is 
subject to significant competitive constraints from Ethernet. According to the 
Notifying Party, InfiniBand is no longer protected by any material technical 
advantages, such as low latency, from Ethernet competition. Therefore, the 
Notifying Party claims that there is no application for which a particular type of 
interconnect solution, such as InfiniBand, would be the only option available to 
custome rs.  
 
 
32 (158)  According to the Notifying Party, Mellanox has actually contributed to this trend 
with the launch of RDMA over converged Ethernet (“RoCE”). RDMA provides 
direct memory access from the memory of one host to the memory of another host 
while reducing the  burden on the Operating System and CPU. This boosts 
performance and reduces latency. With RoCE, Mellanox shared this InfiniBand 
advantage with Ethernet, thus accelerating Ethernet’s uptake. In addition, and on 
account of customers’ preferences, Mellanox m ade this technology open -source, 
allowing all Ethernet suppliers to take advantage of it.  
– As regards Mellanox’s Ethernet NICs of at least 25 Gb/s  
(159)  In the first place , the Notifying Party argues that even on a narrowly defined market 
for Ethernet NICs with a speed of 25 Gb/s and more, Mellanox faces significant and 
growing competitive constraints which are not yet fully visible in a backward -
looking/static market share analysis. Mellanox was the first producer to launch an 
Ethernet NIC of 25 Gb/s and above. It started in 2012. Since then, new providers 
have entered the market, including Intel, Cisco, Broadcom, and Chelsio taking away 
market share from Mellanox.  
(160)  In the second place , the Notifying Party submits that some of Mellanox’s largest 
historical customers are now building their own Ethernet NICs. This includes […]. 
These companies used to source Ethernet NICs from Mellanox and others but have 
since decided to build their own NIC s in-house. Others can follow their lead. These 
“in-house” solutions also exert competitive pressure on Mellanox, which is not 
reflected at all on market share data.  
(161)  In the third place , the Notifying Party argues that  [BUSINESS SECRETS  – 
Information redact ed regarding business strategy] . 
(b)  As regards the Merged Entity’s ability to engage in tying/bundling practices  
(162)  Second , as regards technical tying, the Notifying Party claims that there are no 
practicable means through which the Parties could degrade intero perability between 
Mellanox’s network interconnect and the discrete datacentre GPUs of NVIDIA’s 
competitors’.139 Moreover, the Notifying Party claims that it is commercially 
necessary to continue promoting interoperability and compatibility with third partie s, 
in particular with Intel and AMD, because the Parties are dependent on the CPU 
makers,  who have the truly indispensable products that form the backbone of any 
system, and who could retaliate.140 The Merged Entity  would not have the technical 
ability to de grade its competitors’ performance because datacentres use open 
standards and systems that the Parties do not control.  
(163)  Third , the Notifying Party argues that the procurement structure of this industry 
precludes the ability to leverage. In the first place, the Notifying Party argues that 
end-customers are large, sophisticated enterprises that exert considerable 
countervailing buyer power in a bidding market  with credible alternatives. In the 
second place, the Notifying Party argues that the Parties mainly se ll through 
intermediaries (OEMs and ODMs), limiting the possibility to engage in mixed 
                                                 
139  Form CO, paragraphs 561 -580. 
140  Form CO, paragraphs 556 -560. 
 
 
33 bundling strategies, given that OEMs could easily buy the “bundle” from the Parties 
but then sell the components separately to their customers. In the third place, 
custo mers often buy processing and network interconnect products in distinct 
transactions, not synchronously, again limiting the possibility to engage in mixed 
bundling strategies, as the combined entity would need to make separate offers for 
the different type s of products, in order to conform with the customer’s purchasing 
practices.141 
As regards incentives  
(164)  According to the Notifying Party, the Merged Entity  would also not have the 
incentive  to degrade the interoperability of Mellanox’s InfiniBand fabric and/or 
Ethernet NICs of at least 25 Gb/s with third parties’ discrete datacentre GPUs or to 
raise Mellanox’s products’ relative price when combined with third party GPUs.  
(165)  First, the Notifying  Party argues in general terms that the Parties have strong 
commercial  incentives to continue interoperating with other datacentre component 
suppliers, including their rivals. According to the Notifying Party, by f ostering 
compatibility, datacentre compone nt suppliers contribute to growing both the overall 
market and their addressable share of it. This is particularly so because OEMs have a 
strong preference for using components that interoperate with other components 
(including the OEM’s own). The prevalen ce of standardized interfaces, such as 
Peripheral Component Interconnect Express (“ PCIe ”), and protocols, like Ethernet, 
illustrate s the necessity for suppliers to maintain interoperability for their products to 
be viable.142 
(166)  Second, the Notifying Party argues that the cost of foreclosing suppliers of rival 
processing solutions in terms of lost interconnect sales would outweigh any benefit 
from increased GPU sales. However, the only scenario considered by the Notifying 
Party is  a scenario whereby the Merged Entity  would refuse all together to sell 
Mellanox’s interconnects unless a customer also buys NVIDIA’s GPUs. The 
Notifying Party claims that this would be unprofitable because many Mellanox 
customers do not need GPUs.143 
(167)  Third , the Notifying Party argues that any leveraging strategy would lead to 
retaliation from Intel and AMD, which control the ecosystems attached to their 
CPUs. Moreover, the Notifying Party argues that any leveraging strategy (assuming 
the Merged Entity ’s domi nance on some interconnect markets) would expose the 
Parties to antitrust scrutiny and possible follow -on litigation. This risk acts as a 
significant deterrent to carry out any putative anti -competitive foreclosure 
strategy.144 
(168)  Fourth, the Notifying Party ex plains that if Mellanox had the ability and incentive to 
leverage an alleged strong market position on a hypothetical market for Ethernet 
NICs of at least 25 Gb/s, it would already have done so into the adjacent 
hypothetical market for Ethernet switches of  at least 25 Gb/s. NICs and switches are 
                                                 
141  Form CO, paragraphs 581 -587. 
142  Form CO, paragraphs 590 -598. 
143  Form CO, paragraphs 607 -610. 
144  Form CO, paragraphs 611 -617. 
 
 
34 perfect complementary products that compose interconnect systems, and switches 
sales are worth much more than  NICs sales . Despite this, Mellanox has never sought 
to tie, bundle, or degrade interoperability between i ts NICs and rivals’ switches.145  
As regards effects  
(169)  According to the Notifying Party, even on the basis of narrow market segments 
where the Parties’ current positions would be stronger, and assuming the Merged 
Entity  was seeking to leverage its position in the putative markets for high -
performance interconnect fabrics and Ethernet NICs of at least 25 Gb/s, the 
Transaction will not lead to anti -competitive foreclosure. This is for the following 
reasons.  
(170)  First, the Notifying Party argues that no foreclosure st rategy based on Mellanox’s 
position in these  market segments would cover a fraction of the market output large 
enough in the related market for discrete datacentre GPUs to cause anti -competitive 
foreclosure. According to the Notifying Party, even assuming that both Mellanox 
Ethernet NICs of at least 25 Gb/s and Mellanox’s InfiniBand fabric were must -have 
products, a large majority of GPU sales correspond to GPU -accelerated servers 
connected either with competing high -performance fabrics, competing Ethernet 
NICs of at least 25 Gb/s or Ethernet NICs below 25 Gb/s (from either Mellanox or 
competitors) for which it is clear that Mellanox does not hold a strong position. Only 
a small minority of GPU sales correspond to GPU -accelerated servers connected 
with Mella nox InfiniBand or Mellanox Ethernet NICs of at least 25 Gb/s. As a 
result, the Notifying Party argues that there would still be considerable GPU sales 
opportunities available to other GPU vendors. Mellanox could thus not foreclose a 
“sufficiently large fra ction ” of sales of discrete GPUs used in datacentres.146  
(171)  Second, the Notifying Party argues that Mellanox’s position within the two putative 
markets is eroding  due to the entry/expansion of competitors (see above). Therefore, 
not only the ability to leverag e Mellanox’s position becomes untenable but even 
assuming that the Merged Entity  had such ability, the fraction of discrete datacentre 
GPU sales that would be affected would be even more limited.  
(172)  Third, the Notifying Party argues that the discrete datacent re GPU market is growing 
quickly, meaning that the discrete datacentre GPU sales not connected with 
Mellanox products will increase in the coming years, leaving even more GPU sales 
opportunities to competing GPU suppliers.  
(173)  Fourth, the Notifying Party argue s that Intel and AMD are leveraging R&D from 
gaming to the datacentre. Therefore, Intel and AMD will have additional GPU scale 
beyond datacentres and beyond any potential reach of Mellanox’s products.  
(174)  Fifth, the Notifying Party argues that Intel’s decisio n not to buy Mellanox and 
leaving Mellanox to NVIDIA, while sunsetting its Omni -Path fabric and continuing 
investing in discrete datacentre GPUs is inconsistent with the idea that the Merged 
Entity  could foreclose Intel from launching its discrete datacent re GPU.  
                                                 
145  Form CO, paragraphs 618 -623. 
146  Form CO, paragraphs 630 -644 and Notifying  Party’s response to RFI 10, question 3.  
 
 
35 (175)  Sixth, the Notifying Party argues that Intel and AMD could team up with Cray’s 
Slingshot to overcome any foreclosure strategy.  
(176)  Seventh, the Notifying Party explains that Mellanox and NVIDIA depend on the 
CPU suppliers, in particular, (i) to release  roadmap information (which defines the 
standards that Mellanox and NVIDIA need to meet  in their product designs) and (ii) 
to offer “Early Access Programs,” which allow Mellanox and NVIDIA to test and 
validate their products with next -generation CPUs. Acco rding to the Parties, the 
threat of Intel and AMD withholding information and cutting off access to early 
releases of CPUs acts as a powerful disciplining constraint against the Parties trying 
to exploit Mellanox’s market position through bundling/tying pr actices.  
(177)  Eighth, the Notifying Party argues that OEMs and at least some end -customers have 
considerable countervailing buyer power and that they could put pressure on the 
Merged Entity  not to bundle/tie their products, either by threatening to remove the 
Parties from approved vendor lists (in the case of OEMs) or by switching to 
alternatives or creating in -house variants in particular in the case of large CSPs.  
5.2.3.3. Commission’s assessment  
(1) As regards ability  
(a) Assessment of Mellanox’s potential market power  
(178)  As regards Mellanox’s potential market power on a high performance fabric 
market , the Commission considers that Mellanox most likely has a sufficient degree 
of market power to leverage its p osition with its InfiniBand fabric in order to 
influence the choice of the GPU supplier. This is because the market investigation 
showed that, for Mellanox’s InfiniBand fabric customers, there are and will continue 
to be within the next 2 -3 years too few r elevant alternatives. InfiniBand’s features 
appear to be key to connect their GPU -accelerated servers given their workloads.  
(179)  In the first place, the market investigation has shown that as of today, end -customers 
connecting their GPU -accelerated servers wit h Mellanox InfiniBand fabrics do not 
have sufficient alternatives. The vast majority of end -customers procuring GPU -
accelerated servers connected with Mellanox’s InfiniBand fabric over the last two 
years declared that they did not consider any alternative as credible. These customers 
explained that for the clusters of GPU -accelerated servers they recently acquired 
Mellanox’s InfiniBand fabric was the only credible choice.147 Some of them 
explained that this is because InfiniBand has unique features that canno t be 
replicated to date, including specific optimisations for MPI148 and very low 
latency.149 
(180)  This is confirmed by OEMs  and competitors . Major OEMs responding to the 
Commission’s market investigation explain that there are end -customers for which 
Mellanox’s In finiBand fabric is the only credible choice to connect their GPU -
accelerated server clusters. According to them, there are not sufficient credible 
                                                 
147  Replies to Questionnaire Q3 to End Customers , questions 39 and 45.  
148  Message Passing Interface (MPI), a message passing standard for parallel computing architectures, which 
is a fundamental requirement for networking devices for HPC and AI training workloads.  
149  Replies to Questionnaire Q3  to End C ustomers , questions 38, 39 and 45.  
 
 
36 alternatives to Mellanox’s InfiniBand fabric to connect GPU -accelerated server 
clusters on the market.150 The vast majority of competitors also confirm that there 
are specific end- customers for which Mellanox’s InfiniBand fabric is the only 
credible choice to connect their GPU-accelerated server clusters.151 
(181)  In the second place, even looking forward to the next 2-3 years, the Commission 
considers that InfiniBand will continue to be key for many customers building GPU-
accelerated server clusters and that the alternatives available will either not be 
sufficiently performant and/or will not be sufficiently broadly available. 
(182)  First, as regards Intel’s Omni -Path fabric, the Commission considers that the first 
and only generation of Omni-Path (which is limited to 100 Gb/s bandwidth) is 
unlikely to constitute a credible alternative to InfiniBand going forward in case of 
bundling/tying strategies.  
(183)  This is supported by Mellanox’s internal documents. In one of its presentations to 
the Board of Director, Mellanox considered already in October 2018, that InfiniBand 
had [BUSINESS SECRETS – Information redacted regarding business strategy].152 
[BUSINESS SECRETS – Information redacted regarding business strategy].153 
(184)  Since then Mellanox’s InfiniBand HDR 200G has become a commercial success 
while Intel discontinued the development of Omni-Path. The latest Top500 list of 
supercomputers of November 2019 shows that 200 Gb/s HDR InfiniBand accelerates 
31% of the new 2019 InfiniBand systems on this list.154 If customers make the 
choice to go for a 200 Gb/s bandwidth, the Commission considers that Intel’s Omni -
Path cannot compete against Mellanox’s InfiniBand HDR 200Gb/s. Moreover, given 
the absence of a roadmap for future faster fabrics, the Commission considers that 
even customers opting for a 100 Gb/s fabric may be even more reluctant than before 
to consider Omni-Path as a credible alternative. On this point, it should be noted that 
even for past opportunities, before the announcement by Intel that it would stop 
developing Omni-Path, the vast majority of customers acquiring GPU-accelerated 
server clusters connected with Mellanox InfiniBand fabric did not consider Omni-
Path to be a suitable alternative.155 
(185)  Overall, given the strong adoption already in 2019 of the new generation of 
InfiniBand HDR 200Gb/s and  the fact that Omni-Path was already considered 
inferior to the previous generation of Mellanox’s InfiniBand fabric, the Commission 
considers that Omni-Path is unlikely to constitute a credible alternative to InfiniBand 
going forward in case of bundling/tying strategies.  
(186)  Second, as regards Cray Slingshot, the Commission considers that even if Slingshot 
may technically be a credible alternative to Mellanox’s InfiniBand, it will  most 
likely not be sufficiently broadly available for Intel and AMD to compete 
successfully against a bundle NVIDIA GPU – Mellanox InfiniBand fabric, with the 
                                                 
150  Replies to Questionnaire Q2 to OEMs, questions 39 and 42. 
151  Replies to Questionnaire Q1 to Competitors, question 34. 
152  Mellanox’s internal document, […], slide 233.  
153  Mellanox’s internal document, […], slide 97. 
154  https://www hpcwire.com/off-the-wire/mellanox-announces- 200g -hdr-infiniband-accelerates- 31-of-new-
infiniband-systems/ .  
155  Replies to Questionnaire Q3 to End Customers, question 45. 
 
 
37 exception of very specific large (exascale) supercomputer opportunities , as explained 
above . 
(187)  As explained above, both Intel and AMD discrete datacentre GPUs have won two 
recent opportunities, i.e. for the Aurora and Frontier supercomputers, which will sit 
atop the Top500  list of supercomputers. As the Notifying Party explain s, they have 
done so with Cray’s Slingshot fabric (as part of Cray servers systems), not 
Mellanox’s InfiniBand. The Commission considers that these two examples strongly 
support the fact that Cray’s Slingshot, at least from a technical point of view, is 
emerging as a credible alter native to Mellanox’s InfiniBand in the short term – the 
Frontier and Aurora supercomputers are both expected to be deployed by 2021. 
These examples may suggest that access to Mellanox’s InfiniBand fabric is not 
indispensable for Intel and AMD to win discre te datacentre GPU opportunities even 
for the most demanding HPC/AI applications. Both Intel and AMD could in 
principle team up with Cray (which was recently acquired by HPE) to compete with 
a bundle NVIDIA  GPU – Mellanox InfiniBand fabric for a given oppor tunity.  
(188)  However, there remain doubts whether such a counter -strategy could be deployed 
sufficiently widely to defeat a bundling strategy by the Merged Entity . This is 
because Cray’s Slingshot fabric is currently planned to be available as part of Cray’s 
next generation Shasta supercomputer  only, not on the merchant market for other 
OEMs/ODMs to deploy in other server clusters configurations.156 The Commission 
considers that Cray’s Shasta supercomputer is a unique platform for exascale 
supercomputer opportuni ties, as reflected by the two wins with AMD and Intel 
GPUs discussed above which both involve exascale supercomputers. In addition, 
Cray announced a third exascale supercomputer win, El Capitan, expected to come 
online in 2023. Together these supercomputer  projects  will be the three first exascale 
supercomputers built in the United States.157 However, the Commission considers 
that Cray’s Shasta supercomputer is unlikely to be a good fit for many customers 
seeking to acquire smaller scale GPU -accelerated serve rs as part of their datacentres. 
An Intersect 360 Research paper of October 2019 for instance explains that Cray 
“has continued to be relatively weak outside of its powerhouse core segment”  of 
large supercomputer procurements by the US government. In parti cular, “Cray’s 
opportunities are sometimes limited by the company’s lack of participation in the 
entry -level and midrange HPC server classes” .158  
(189)  This is in line with end-customers feedback to the Commission’s  market 
investigation. According to some of them, in order to be suitable as an alternative, 
HPE would have to develop Slingshot NICs for non -Cray server systems.159 On this 
point, the OEMs expressing a view on the question explained that even if HPE 
                                                 
156  Slingshot was created to act as a suitable network backbone, one that would offer a host of features to 
allow the Shasta system to comfortably straddle the supercomputing and datac entre worlds. 
https://www.cray.com/sites/default/files/Slingshot -The-Interconnect -for-the-Exascale -Era.pdf  . 
157  https://www.cray.com/blog/cray -announces -third -exascale -supercomputer -win/. 
 https://www.cray.com/customers/argonne -national -laboratory . 
 https://www.cray.com/company/customers/oak -ridge -national -laboratory . 
158  Mellanox’s internal document, […], page 6.  
159  Replies to Questionnaire Q3 to End C ustomers , question 42.  
 
 
38 decided  to extend Slingshot to other server systems, it would take more than 2 -3 
years to make this technology generally available.160 
(190)  Third, as regards Atos -Bull’s BXI fabric, Atos is confident that its new (Bull’s) BXI 
fabric, although it is still in development , will be a suitable alternative to Mellanox’s 
InfiniBand by 2020, even in case of low latency requirements.161 Howe ver, so far, 
Atos has only sold its network interconnects as part of its own servers, and there are 
no indications that this will change post -Transaction. The Commission considers that 
Atos’ niche presence in the server markets means that Bull’s BXI will not be 
sufficiently broadly available for Intel and AMD to compete successfully against a 
bundle NVIDIA  GPU – Mellanox InfiniBand fabric.162 Final ly, even if Atos decided 
to extend BXI to other server systems, OEMs consider that it would take more than 
2-3 years to make this technology generally available.163 
(191)  Fourth, the vast majority of customers, OEMs and competitors consider that no other 
proprieta ry high performance fabric could become a suitable alternative to 
Mellanox’s InfiniBand fabric within the next 2 -3 years.164 The majority of OEMs, 
end-customers and competitors expressing a position on the question also do not 
believe that a competing Ethern et fabric will emerge within the next 2 -3 years that 
would be able to compete successfully with InfiniBand.165 On this point, the 
Commission note s that contrary to the Notifying Party’s view, the results of the 
market investigation indicate that InfiniBand m aintains an advantage in terms of 
latency over Ethernet.166 This is supported by the Parties’ own data. These data show 
that Mellanox’s most advanced Ethernet NICs (ConnectX -6 EN) have a latency […] 
compared to Mellanox’s most advanced InfiniBand NICs (Conne ctX-6 VPI).167 
(192)  Therefore, the Commission considers that Mellanox most likely has a sufficient 
degree of market power to leverage its position in the market for high performance 
fabric in order to influence the choice of the GPU supplier. A fortiori , this con clusion 
holds in a possible narrower market for InfiniBand fabric, in which Mellanox holds a 
market share of 100%.  This conclusion also holds if the high -performance fabric 
market were to be segmented according to the bandwidth. Mellanox currently offers 
InfiniBand fabrics with three different bandwidth – i.e. 56Gb/s, 100Gb/s and 
200Gb/s. The Commission considers that Mellanox most likely has a sufficient 
degree of market power to leverage its position to influence the choice of the GPU 
supplier irrespectiv e of the bandwidth considered.  
(193)  As regards Mellanox’s potential market power on a market for Ethernet NICs 
of at least 25 Gb/s , on balance, the Commission considers that Mellanox most likely 
                                                 
160  Replies to Questionnaire Q2 to OEMs, question 45.  
161  Replies to Questionnaire Q1 to Competitors, question 17.  
162  According to Hyperion Research, Atos has a market share of 1.1% in the HPC server market.  
163  Replies to Questionnaire Q2  to OEMs, question 45.  
164  Replies to Questionnaire Q2 to OEMs, question 45 ; Questionnaire Q3 to End Customers, question 42; and 
Questionnaire Q1 to Competitors, question 37.  
165  Replies to Questionnaire Q2 to OEMs, question 46; Questionnaire Q3 to End Custo mers, question 43; and 
Questionnaire Q1 to Competitors, question 38.  
166  Replies to Questionnaire Q2 to OEMs, question 46; Questionnaire Q3 to End Customers, question 43; and 
Questionnaire Q1 to Competitors, question 38.  
167  Notifying Party’s response to RFI  4, question 24.  
 
 
39 does not  have sufficient degree of market power to leverage its position in order to 
influence the choice of the GPU supplier. This is for the following reasons. 
(194)  First, overall, OEMs’ and end -customers’ responses to the Commission’s market 
investigation suggest that Mellanox does not have sufficient degree of market powe r 
today to leverage its position in order to influence the choice of the GPU supplier. 
For instance, the vast majority of end-customers and OEMs expressing a view on the 
question consider that there are sufficient credible alternatives to Mellanox’s 
Ethernet NICs with a speed of at least 25 Gb/s to connect GPU-accelerated server 
clusters on the market, including Broadcom, Intel, Marvell, Cisco and Chelsio who 
all offer Ethernet NICs of at least 25 Gb/s.168 This does not mean that today all these 
NICs offer exactly the same performance levels according to all metrics and all 
environments. But at least, from the point of view of end-customers and OEMs, 
these alternatives are already sufficiently credible today to prevent the Merged Entity 
from leveraging its position in Ethernet NICs of at least 25 Gb/s to impose an 
NVIDIA GPU on them.  
(195)  Second, going forward, even if in the recent past there may have been a performance 
gap between Mellanox and some of its competitors as regards their Ethernet NICs of 
at least 25 Gb/s, the Commission considers that Mellanox ’s competitors  are 
developing new lines of more performant Ethernet NICs and these new products will 
compete more strongly with Mellanox’s Ethernet NICs than is the case today. As 
explained by the Notifying Party, Mellanox was the first mover in the market for 
Ethernet NICs of at least 25 Gb/s in 2012. Since then, competitors, such as 
Broadcom, Intel, Marvell, Cisco and Chelsio have entered, improved their products 
and expanded – from 0% market share in 2012 competitors have reached a combined 
market share of [30-40]% in 2018. For example, Broadcom was the first to sample 
Ethernet NICs of 200Gb/s in August 2018, only later followed by Mellanox 
ConnectX-6 Ethernet NICs. According to a Linley Group Report, the two competi-
tors offer similar features for mainstream datacentre applications.169 
(196)  The vast majority of customers and OEMs expressing an opinion on the question, 
consider that, within the next 2-3 years, to the extent that it was not the case already, 
compet ing Ethernet NICs suppliers will be able to offer a competitive Ethernet NIC 
able to compete successfully with Mellanox’s latest generation of high -speed 
Ethernet NICs.170 
(197)  Of particular interest is Chelsio. According to some customers, Chelsio is a 
particularly good alternative technically. However, according to one specific 
                                                 
168  Replies to Questionnaire Q3 to End Customers, question 37; Questionnaire Q2 to OEMs, question 40. 
169  https://www.globenewswire.com/news-release/2018/09/12/1569930/0/en/Broadcom-Samples-Thor-
World-s-First- 200G -Ethernet-Controller-with- 50G-PAM-4-and-PCIe-4-0 html ; 
https://www.linleygroup.com/newsletters/newsletter detail.php?num=5910&year=2018&tag=3 .  
170  Replies to Questionnaire Q3 to End Customers, question 44; Questionnaire Q2 to OEMs, question 47. For 
instance, t o the question “Do you consider that within the next 2-3 years, competing Ethernet NICs 
suppliers (Broadcom, Intel, Marvell, etc.) will be able to offer a competitive Ethernet NIC able to compete 
successfully with Mellanox’s latest generation of high -speed Ethernet NICs (considering also Mellanox’s 
new products release roadmap), an end customer explained “Broadcom, Intel, and Marvell will be able to 
compete successfully and reach similar levels of performance due to functional similarities in their 
products ”, another lists “Intel, Broadcom, Netronome”, while a third one says “Other Ethernet NICs 
suppliers such as Intel and Broadcom already offer similar products ”.  
 
 
40 customer, Chelsio lacks the support from big OEMs.171 Assuming the Merged Entity 
were to engage in a bundling or tying strategy, the Commission considers that major 
OEMs would most likely increase their support for Chelsio, who currently supplies 
Ethernet NICs of up to 100Gb/s, in order to defeat the bundle and allow Intel and 
AMD to team up with a good alternative to Mellanox’s Ethernet NICs of at least 25  
Gb/s. 
(198)  The Commission also considers that Broadcom and Intel will most likely close the 
gap to a sufficient extent with Mellanox’s Ethernet NICs to be considered a credible 
alternative in case of tying/bundling strategies. In a presentation to the Board of 
Directors, Mellanox explains that [BUSINESS SECRETS – Information redacted 
regarding business strategy]. In particular, a Tolly Report commissioned by 
Mellanox dated September 2019, shows that Mellanox ConnectX-5 Ethernet NIC 
delivers better performance than Broadcom NetXtreme E NIC.172 However, in the 
same presentation, Mellanox explains that [BUSINESS SECRETS – Information 
redacted regarding business strategy].173 
(199)  Third, following the State of Play meeting of December 5, 2019, the Parties 
produced  an analysis of Mellanox profit margins (in dollar) for its Ethernet NICs of 
at least 25 Gb/s, distinguishing between previous generations of NICs and 
ConnectX-5. This analysis shows a [BUSINESS SECRETS – Information redacted 
regarding profit margins] in profit margins (in dollar) both for previous generations 
of NICs [BUSINESS SECRETS – Information redacted regarding profit margins] 
and for ConnectX-5 [BUSINESS SECRETS – Information redacted regarding profit 
margins].174 This is consistent with the increased competitive pressure exerted by 
competing Ethernet NICs suppliers like Broadcom, Chelsio, Intel, Marvell and 
Cisco, who only entered the market for Ethernet NICs of at least 25 Gb/s at a later 
stage and who are still expanding. 
(200)  Fourth, in further support of the fact that Mellanox most likely does not have 
sufficient market power with its Ethernet NICs of at least 25 Gb/s to leverage into 
any other markets, the Commission notes that Mellanox’s strong market position in 
Ethernet NICs of at least 25 Gb/s has apparently not placed it in a position to 
leverage this position into the adjacent hypothetical market for 25 Gb/s+ Ethernet 
switches and meaningfully grow its sales of Ethernet switches of at least 25 Gb/s. 
According to the Notifying Party, Mellanox’s share of sales for Ethernet switches of 
at least 25 Gb/s was around [0-5]% in 2018.175 This is despite the fact that, as 
                                                 
171  Replies to Questionnaire Q3 to End Customers, question 44. 
172  According to this study, Mellanox ConnectX-5 Ethernet NIC delivers up to twice the throughput of the 
Broadcom NetXtreme E adapter for various environments and workloads common in cloud, enterprise, 
and flash-storage deployments. In addition, the testing showed that Mellanox can handle more 
connections, prevents packet loss, and consumes fewer host CPU cycles per packet. See Mellanox’s press 
release available at https://ir mellanox.com/news-releases/news-release-details/mellanox-releases-
independent-report-demonstrating-connectx ; and Tolly Enterprises, Mellanox ConnectX®-25GbE 
Ethernet Adapter – Adapter performance v. Broadcom NetXtreme® E, p. 1 (Sep. 2019), available at 
https://www mellanox.com/reports/tolly/ .  
173 Mellanox’s internal document, […], slide 49.  
174  [BUSINESS SECRETS – Information redacted regarding profit margins]. However, as shipments of 
ConnectX-5 only started late October 2016, the Commission considers that profit margins generated in 
2016 might not be representative. The Commission therefore only considered profit values from 2017 
onwards. See Notifying Party’s Supplementary Submi ssion of 9 December 2019, paragraph 33.  
175  Form CO, paragraph 520. 
 
 
41 explained by the Notifying Party, Ethernet NICs and switches are much closer 
complementary products than Ethernet NICs and discrete datacentre GPUs. NICs 
and switches are components  of the same interconnect systems. When datacentre 
end-customers procure  Ethernet NICs , directly or via OEMs/ODMs,  to connect their 
servers, they also need to buy Ethernet switches. Moreover, according to the 
Notifying Party, in an average integrated Mella nox Ethernet network interconnect 
system of at least 25 Gb/s, the gross profit (in dollar) made by Mellanox from the 
sales of Ethernet switches is […] the gross profit (in dollar) made by Mellanox from 
the sales of Ethernet NICs.176 
(b) Assessment of the Merged Entity’s ability to engage in the various 
tying/bundling practices  
(201)  As regards  the Merged Entity ’s technical ability to selectively degrade 
interoperability  of competing GPUs with Mellanox’s InfiniBand fabric and/or 
Ethernet NICs of at least 25  Gb/s , the Co mmission considers that the Merged 
Entity  would not have such an ability, for the following reasons.  
(202)  First, Mellanox’s network adapters (whether InfiniBand or Ethernet) and NVIDIA’s 
GPUs currently use the open standard PCIe to communicate with other components 
in the datacentre. PCIe is an industry standard used to connect the CPU host to the 
peripherals within a server  – for example , CPU -to-network cards, CPU -to-memory, 
CPU -to-hard drive, CPU -to-accelerator.177 PCIe is an open standard solution,178 
available to everyone on FRAND terms, and it is the de facto  standard for 
interconnecting systems within a server.  
(203)  As a matter of principle, e very major datacentre component, including NICs and 
GPUs, must interoperate with the CPU , which is the central co mponent always 
present in any kind of servers .179 Intel and AMD, the two main CPU suppliers, 
support PCIe. Therefore, it is currently a requirement for both Mellanox’s network 
interconnects and NVIDIA’s GPUs to support  PCIe in order to communicate with 
the C PUs. It follows that NVIDIA and Mellanox both use the published PCIe 
standard to design their products.180 
(204)  In addition , the Parties explained that, even though Mellanox’s “PeerDirect” 
protocol enables direct data transfers between Mellanox NICs and for examp le, 
GPUs without having to go through the CPU, this direct communication still takes 
place via the PCIe bus.  In this respect, the Parties explained that any PCIe -enabled 
device that implement the publicly available PCIe peer -to-peer standard can 
interopera te with Mellanox’s NICs.181  
                                                 
176  Notifying Party’s Supplementary Submission of 9 December 2019, paragraph 34; Notifying Party’s 
response to RFI 13, question 2; and Notifying Party’s response to RFI 16, question 4.  
177  Commission’s decision of 14 October 2015 in case M.7688 – Intel/Altera , paragraph 125.   
178  Developed though cooperative standard -setting under the auspices of the electronics industry consortium 
PCI-SIG (https://pcisig.com/).   
179  The Parties confirmed thi s in the Notifying Party’s Supplementary Submission of 9 December 2019, 
paragraphs 58 -64. 
180  Form CO, paragraph 541.  
181  Notifying Party’s Supplementary Submission of 9 December 2019, paragraph 45.  
 
 
42 (205)  Second, Mellanox seems to be generally committed to open source software as a 
mean s to ensure the broadest interoperability possible for its products. In particular, 
Mellanox contests t he claim  by certain  competitors  of NVIDIA182 that some of the  
features  it developed contain proprietary elements.  In this respect, Mellanox, states 
that its “ PeerDirect ” protocol is “ standards based and open source ”.183 While 
Mellanox has worked with both NVIDIA and AMD in the past in order to allow 
them to implement “PeerDirect” for their respective GPU products, as also explained 
in the above paragraph, Mellanox considers that this PCI -e-based feature is now 
open source and available to any GPU supplier.184 Moreover, Mellanox explains 
that, given that the software is open -source, any exchange of information between a 
GPU provider and Mellanox regarding its implementation might be convenient, but 
is not necessary.185 
(206)  Mellanox  also provided information with respect to a number of specific  application 
progra mming interfaces (“APIs”)  in order to support its claim that these APIs are  
open -source.186  
(207)  Third , the re are a number of technical limits to the  Merged E ntity’s ability to 
selectively degrad e interoperability with Mellanox’s network interconnects when 
they are combined with third parties GPUs . In the first place , in a classic CPU-
centric system, the network interconnect communicates with the CPU via PCIe, and 
the CPU passes on any commands to the GPU. Hence, the network interconnect is 
“blind” to what proces sor is accelerating any given task  and it is technically not 
possible to degrade interoperability only for selected accelerators . In the second 
place,  given that Mellanox exclusively relies on open source software, a ny 
accelerator -specific code, which woul d degrade the listed features when running 
with competing GPUs, would be detected and rejected  by Linux, Microsoft or 
VMWare kernels.187 
(208)  Fourth , contrary to the claim of competitors188, the Merged Entity  would likely not 
have the ability to replace the PCIe st andard with a proprietary network interface. 
This is because , as apparent from NVIDIA ’s internal documents,189 [BUSINESS 
SECRETS – Information redacted regarding business plans]190 [BUSINESS 
SECRETS – Information redacted regarding business plans].191 In additio n, the 
Notifying Party notes  that developing a new interface would be successful only if it 
                                                 
182  Intel’s response to RFI 1, page 2; AMD’s response to RFI  1, question 4 a).  
183  Notifying Party’s Supplementary Submission of 9 December 2019, paragraph 45.  
184  Notifying Party’s response to RFI 14 , paragraph 50.  
185  Notifying Party’s response to RFI 14 , paragraph 39.  
186  Including the Mellanox Messaging Accelerator  (“MXM“), which Mellanox contributed to the open -source 
Unified Communication X (“UCX”) framework, as well as Mellanox’s OFED distribution 
(“MLNX_OFED”).  
187  Notifying Party’s Supplementary Submission of 9 December 2019, paragraphs 58 -60. 
188  AMD’s response  to RFI 1, questions 2 .a) and 2 .b). 
189  Notifying Party’s Supplementary Submission of 9 December 2019, annex 4.  
190  Notifying Party’s Supplementary Submission of 9 December 2019, paragraph 53.  
191  Notifying Party’s response to RFI 1 4, paragraphs 53 -54. In particular, NVLink is a memory fabric 
interconnect, allowing connected GPUs to share memory over a simple and specific protocol. It is 
purpose -designed to connect identical GPUs to each other and in near proximity. In contrast to this, 
InfiniBand and Ether net adapters are IO peripherals and connect to a general -purpose IO bus, such as 
PCIe. They have rich networking protocols necessary to connect systems that have completely different 
capabilities throughout the datacentre, and therefore require a versatile  and complex bus like PCIe.  
 
 
43 is widely available and can interoperate with all different components of the 
datacentre.192 In particular , adapters need to interoperate with Intel and AMD’s 
CPUs which rely on PCIe.  
(209)  The Commission notes that, in the current setting, the existence of PCIe, an industry 
standard used by all major suppliers of datacentre components including Mellanox 
and NVIDIA  and Mellanox’s strong commitment to open source, leave little room 
for any selective degradation of interoperability. While a change of these current 
circumstances cannot be excluded, the Commission considers that it does not need to 
take a position on the  question whether the Merged Entity  will have the technical 
ability to engage in selective interoperability degradation because, in any case, the 
Commission considers that the Merged Entity  will not have any incentive to do so as 
explained below at paragra phs 221 to 223.  
(210)  As regards the Merged Entity ’s ability to engage in contractual tying  whether 
with Mellanox’s InfiniBand fabric and/or Ethernet NICs of at least 25  Gb/s , the 
Commission considers that it is unclear whether the Merged Entity  would have such  
ability. As explained by the Notifying Party, most of Mellanox’s network 
interconnects and NVIDIA’s GPUs are sold through OEMs and ODMs. The 
question is whether these intermediates would have the ability and incentive to 
defeat a contractual tying strateg y. The Notifying Party claims that OEMs/ODMs 
could defeat such practice by buying the “bundle” from the Parties and then selling 
the components separately to their customers. However, OEMs explained that to 
date, they only rarely  store components of the Pa rties for future projects. Instead the 
vast majority of OEMs’ and ODMs’ purchases of NVIDIA  GPUs and Mellanox 
network interconnect appear to take place in the context of specific projects tendered 
out by end customers.193 This is among others because GPUs an d some network 
interconnect components are expensive; technology evolves quickly; and there are 
many (hundreds if not more than a thousand) different individual network 
interconnect products depending on the exact requirements of customers.194 Based 
on the e vidence available at the date of drafting this decision, the Commission 
considers that there is not enough evidence to conclude whether OEMs and ODMs 
would likely expose themselves to the risk of storing vast amount of bundled 
products to be able to resell  them unbundled, in order to defeat a contractual tying 
strategy. The Commission therefore concludes that it cannot exclude that the Merged 
Entity  would have the ability to engage in contractual tying.  
(211)  As regards the Merged Entity ’s ability to engage in mixed bundling  whether 
with Mellanox’s InfiniBand fabric and/or Ethernet NICs of at least 25  Gb/s , all 
competitors and OEMs expressing a view on the question consider that the Merged 
Entity  would have such ability.195 However, the Commi ssion considers that by 
engaging in such conduct, the Merged Entity  would not have the ability to leverage 
Mellanox’s position to significantly steer end -customers’ choice towards N VIDIA ’s 
GPUs. This is because  the Commission  consider s that AMD and Intel w ould still 
have the ability to compete on price especially considering (1) the low relative price 
                                                 
192  Notifying Party’s response to RFI 14 , paragraph 57.  
193  Replies to Questionnaire Q2 to OEMs, questions 11, 19 -20, 24 and 28.  
194  Mellanox’s Opportunity data shows that Mellanox has sold more than 1000 different products, based on 
the “product name” covering more than 100 “product types”.  
195  Replies to Questionnaire Q1 to Competitors, question 41; Questionnaire Q2 to OEMs, questions 49.  
 
 
44 of network interconnect products as compared to GPUs, implying that a discount on 
the interconnect products would not affect the price of the bundle significa ntly,196 
and (2) the possibility for AMD and Intel to provide a discount on a bundle 
including their CPUs and their GPUs to counter a reduced price by the Merged 
Entity  on a bundle GPU -interconnect when compared to the sum of standalone 
prices .197 Therefore, i n the rest of the decision, th e Commission does not cover the 
mixed bundling scenario any longer.  
(c) Assessment of the Merged Entity’s ability to foreclose  
(212)  As regards the Merged Entity ’s ability to leverage its position in the high 
performance fabric market to foreclose its discrete datacentre GPU rivals , the 
Commission considers that the Merged Entity  would not have such an ability. This is 
because , as will be explained further below  in paragraph 214 , the vast majority of 
discrete datacentre GPU customers do not equip their GPU -accelerated server 
clusters with a Mellanox InfiniBand fabric. As a result , irrespective of the 
tying/bundling strategy considered above, there would remain sufficient demand fo r 
GPUs corresponding to servers systems that do not use Mellanox’s InfiniBand 
fabric. As a result, the Commission considers that, even if the Merged Entity  could 
fully leverage its alleged market power with its InfiniBand fabric (i.e. assuming that 
no cust omer would switch to a competing interconnect to be able to use a competing 
GPU), the Merged Entity  would still not be able to foreclose enough market output 
to hinder Intel’s effective entry and AMD’s expansion into the datacentre GPU 
market.  
(213)  This result  relies on an extensive analysis carried out by the Parties of their 
respective transaction data. The Parties carried out this analysis in two major steps. 
First, they matched their respective transaction databases to determine which 
NVIDIA discrete datace ntre GPU customers also purchased a Mellanox InfiniBand 
fabric in 2018. Second, the Parties estimated for each NVIDIA customer who also 
purchased Mellanox’s InfiniBand fabrics, the share of NVIDIA GPU sales that were 
actually used in servers connected with  the InfiniBand fabrics purchased.  
(214)  The Parties found that only [0-30]% of NVIDIA’s 2018 datacentre GPU revenue 
was made from sales into servers that also use Mellanox InfiniBand.198 Considering 
that NVIDIA with its [90-100]% share of the overall discrete da tacentre GPU market 
is representative of the overall market, this would mean that the Merged Entity  could 
at most foreclose [0-30]% of the discrete datacentre GPU market  (in terms of value)  
by leveraging its position with InfiniBand. This result relies how ever on a number of 
assumptions, some of which are conservative, while some others may not be. The 
                                                 
196  The 2018 GPU dollar profit per server was around […] the 2018 average InfiniBand fabric dol lar profit 
per server. See Notifying Party’s response to RFI 15. Considering a broadly similar gross margin ratio for 
NVIDIA GPUs as for InfiniBand fabric, this means that the ratio of sales value per server would be 
around […] as well. When considering onl y Ethernet NICs, the ratio would be closer to […] (see below).  
197  Together, AMD and Intel account for 97% of the server CPU market (94% Intel and 3% AMD). See 
Notifying Party’s response to RFI 19 . 
198  The rest of NVIDIA’s GPU sales correspond to GPU -acceler ated server clusters using other types of 
network interconnects, i.e. competing high performance fabrics (Intel’s Omni -Path, Cray’s Aries or 
Gemini (and in the future Slingshot), Bull’s BXI, Fujitsu’s Tofu, etc.), Mellanox’s Ethernet NICs of at 
least 25 Gb /s, competing Ethernet NICs of at least 25 Gb/s, and Ethernet NICs below 25 Gb/s (where 
Mellanox has a market share of [0-5]%). 
 
 
45 Commission replicated the analysis of the Parties, keeping the conservative 
assumptions but rel axing to the maximum the non -conservative ones. By doing so, 
the Commission found that at most [0-30]% of NVIDIA’s 2018 datacentre GPU 
revenue could have been made from sales into servers that also used Mellanox 
InfiniBand. This would leave at least [70-100]% of the discrete datacentre GPU 
market (in terms of value) unaffected by any bundling/tying practices considered 
above.  
(215)  This result is particularly conservative considering that it ignores that fact that even 
if the Merged Entity  were to engage in contractual tying or degradation of 
interoperability involving Mel lanox’s InfiniBand fabric, AMD and Intel could most 
likely in the future capture some of the GPU sales corresponding to servers for 
which customers have a preference for Mellanox InfiniBand fabric. This would be 
the case in particular when the customer pro cures  or has the possibility to procure  
the server cluster from HPE (which recently acquired Cray) or Atos, acting as OEM. 
As explained above, both these OEMs offer proprietary high -performance fabrics 
which technically may be credible alternatives to Infi niBand going forward. If the 
Merged Entity  were to try and leverage the customer’s preference for InfiniBand to 
force the purchase of NVIDIA GPUs against the end -customers’ will, the 
Commission considers that these OEMs would likely replace Mellanox’s Infi niBand 
by their own proprietary high -performance fabric in the server system offered to the 
end-customer.  
(216)  As regards the Merged Entity’s  ability to leverage its position both in the high 
performance fabric market and in the market for Ethernet NICs of at least 25  
Gb/s to foreclose its discrete datacentre GPU rivals,  even assuming that Mellanox 
also holds significant market power in Ethernet NICs of at least 25 Gb/s, which the 
Commission considers is not the case, and that the Merged Entity  would have the 
ability to fully leverage this alleged market power, the Parties found that only [0-
30]% of NVIDIA’s 2018 datacentre GPU revenue was made from sales into servers 
that also use Mellanox Ethernet NICs of at least 25  Gb/s. After lifting to the 
maximum the pote ntially non -conservative assumptions, the Commission found that 
the overlap in terms of GPU sales would be at mo st [0-30]%. Therefore, in the 
worst -case scenario, assuming that the Merged Entity  would have the ability to fully 
leverage its position both with InfiniBand and with its Ethernet NICs of at least 25  
GB/s, and only using conservative assumptions, the Merged Entity  could at most 
foreclose [0-40]% of the discrete datacentre GPU market.  Again, this result is 
particularly conservative , as it assumes that the Merged Entity  would have the ability 
to foreclose GPU rivals from selling GPUs in all systems involving Mellanox 
InfiniBand and/or Ethernet NICs of at least 25  Gb/s. This is unlikely to be the case 
for the reasons explained above.  
(217)  In 2018, according  to the Notifying Party, the putative discrete datacentre GPU 
market was worth EUR [1 000-3 000] million .199 Even if the Merged Entity  could 
foreclose every opportunity linked to its Ethernet NIC s of at least 25  Gb/s and 
InfiniBand fabric, considering the most conservative assumptions, that would leave 
at the very least EUR [1 000 -3 000] million  of open opportunities.200 As the 
Commission considers that Mellanox most likely does not  have sufficient degree of 
                                                 
199  Notifying Party’s response to RFI 10 , question 3.  
200  [60-100]% of EUR [1 000-3 000] million .   
 
 
46 market power in the market for Ethernet NICs of at least 25  GB/s to leverage its 
position in order to influence the choice of the GPU supplier, it is more reasonable to 
consider that the Merged Entity  would at most engage in a tying practice invo lving 
its InfiniBand fabric. Even if the Merged Entity  could foreclose every opportunity 
linked to its InfiniBand fabric, considering the most conservative assumptions, that 
would leave at the very least EUR [1 000 -3 000] million  of open opportunities.201 
(218)  These figures are based on the size of the GPU market in 2018. In addition, the 
datacentre market is growing. AMD predicted in May 2019 in an investor 
presentation that as early as 2021, the value of opportunities for GPUs in datacentres 
would be USD 12  000 million  (EUR 11  000 million ).202 If this forecast is correct, 
this would mean that even if the Merged Entity  could foreclose every opportunity 
linked to its InfiniBand fabric,203 this would leave at least EUR [5 000 -10 000]  
million  of open opportunities addres sable by AMD and Intel (EUR [5 000 -10 000]  
million  in case of full leverage of Mellanox’s position also in the market for Ethernet 
NICs of at least 25  Gb/s). This is several times higher than the sales value of 
NVIDIA in 2018.204 This means that in all likel ihood, AMD and Intel will be able  to 
reach their minimum viable scale , even if foreclosed from the segment of the marke t 
linked to Mellanox’s products . 
(219)  Therefore , the Commission concludes that the Merged Entity  would not have the 
ability to foreclose enoug h market output to hinder Intel’s effective long -term entry 
and AMD’s expansion into the discrete datacentre GPU market. This conclusion also 
holds under the assumption of a possible narrower market for InfiniBand fabric or if 
the high -performance fabric m arket were to be further segmented by bandwidth  
ranges . Irrespective of the exact market delineation from which the Merged Entity 
would attempt to leverage its position, Intel and AMD would still be able to address 
most of the growing market for discrete d atacentre GPUs , i.e. the part of the market 
which is unrelated to Mellanox’s network interconnect products.  
(2) As regards incentive  
(220)  The incentive  to degrade interoperability and/or engage in contractual tying depends 
on the degree to which such a strategy wou ld be profitable.205 When considering 
whether or not to engage in such practices, the Merged Entity  faces a trade -off 
between sales of network interconnect products  foregone  and GPU sales retained 
that could otherwise have gone to Intel and/or AMD.  
(221)  As regards degradation of interoperability , as explained above, the only way the 
Merged Entity  would potentially be able to degrade interoperability would be to 
develop a proprietary interface for its NICs to which competing GPU suppliers 
would not have ac cess. However, NICs need to communicate not only with GPUs 
but also with CPUs and other datacentre components. As long as the majority of 
devices communicates via PCIe, the Merged Entity  would have no incentive to 
                                                 
201  [70-100]% of EUR [1 000-3 000] million. 
202  AMD Investor Presentation, May 2019, Slide 15, available at: http://ir.amd.com/static -files/9c985e84 -
bbb6 -4e23 -99bd -dcbb21f18592 .  
203  Assuming the proporti on of opportunities linked to InfiniBand remains constant.  
204  In FY2019 (ending 27 January 2019), NVIDIA turnover in Datacentre GPUs was around EUR [1 000-3 
000] million, see Form CO, paragraph 27.  
205  Non-Horizontal Merger Guidelines,  paragraph 105.  
 
 
47 depart from that standard . If the Merged E ntity were to develop new Ethernet NICs  
of at least 25  Gb/s  or InfiniBand NICs206 with a proprietary interface, the 
Commission considers that these would not be accepted by OEMs and end -
customers in d atacentres because these new proprietary NICs and high per formance 
fabrics  would not be interoperable with the vast majority of CPUs207 and other 
components.208 
(222)  Additionally, the Merged Entity  will rely, as the Parties currently do, on OEMs as its 
largest and most important go -to-market channel. OEMs demand interoper ability 
throughout the datacentre and could delist the Merged Entity ’s products if the 
Merged Entity  would degrade their interoperability.209 This would put at risk all of 
the Merged Entity ’s network interconnect sales without protecting NVIDIA’s GPU 
sales.  
(223)  Overall, therefore, the Commission considers that the Merged Entity  would not have 
the incentive to engage in degradation of interoperability of its network interconnects 
with competing GPUs. This conclusion also holds under the assumption of a 
possible narrower market for InfiniBand fabric or if the high -performance fabric 
market were to be further segmented by bandwidth  ranges . 
(224)  As regards  contractual tying , the Commission considers that the Merged Entity  
would have the ability to focus its contractual tying on situations where end -
customers require GPU -acceleration and not try to force GPUs on customers who do 
not need GPUs . This is because most OEMs and competitors not only indicated that 
GPU  suppliers typically offer their products in the context of specific projects, but 
also, in relation to these projects, these GPU suppliers generally have good 
information on end -customers’ specifications.210 By targeting the contractual tying to 
GPU custome rs only, the Merged Entity  could limit the foregone sales on the 
network interconnect side while increasing the probability that the tie will trigger 
additional GPU sales (as compared to the counterfactual).  
                                                 
206  As part of an InfiniBand fabric.  
207  The Commission is aware that IBM and NVIDIA developed NVLINK as a high -speed connection 
between the IBM POWER 8 CPU and the NVIDIA Tesla P100 GPU  (See 
https://www.ibm.com/blogs/systems/ibm -nvidia -present -nvlink -server -youve -waiting/ ). However, Intel 
and AMD still rely exclusively on and continue to develop new generations of PCIe. Together they 
represent 97% of server CPU sales.  As such, it is crucial for Mellanox’s NICs to support that standard.  
208  According to the Notifying Party, a ll NICs must support the CPU, the root of every computer system. A 
NIC is an I/O peripheral with an I/O register address space. PCIe is designed to  communicate with such an 
I/O peripheral. Every NIC is not only capable of connecting to PCIe —it must connect to the CPU using 
PCIe.  In addition, Mellanox NICs also support the PCIe standard’s peer -to-peer functionality through 
open -source software. Any PC Ie device that supports the peer -to-peer functionality can communicate with 
NICs, including CPUs, memory devices, GPUs, FPGAs, NNPs, IPUs, ASICs, and others. Moreover, the 
Notifying Party explains that the  use of NVLINK between Tesla P100 GPU and IBM Power  8 CPU is not 
a NIC interface, it is a memory interface to directly connect GPU memory to CPU memory.  All IBM 
Power 8 servers include a PCIe NIC for network communications, illustrating that NVLINK is not a 
suitable interconnect for a NIC.  In fact, NVLIN K is not suitable to replace any PCIe connection.  Even 
with NVLINK, IBM Power systems must also include PCIe connections between the CPU and the GPU. 
See Notifying Party’s response to RFI 18. 
209  Form CO, paragraphs 544 -545. 
210  Replies to Questionnaire Q1 to Competitors, questions 18 -19; Questionnaire Q2 to OEMs, questions 19 -
20, 24 and 28.  
 
 
48 (225)  The Notifying Party indicated in the Form CO th at the average GPU profit made by 
NVIDIA  per server is around […] times higher than the average NIC profit made by 
Mellanox per server.211 This means that, the Merged Entity  may have an incentive to 
engage in contractual tying leveraging its position in Ethe rnet NICs of at least 25  
Gb/s if it manages to retain at least 1 GPU opportunity for every […] lost Ethernet 
NIC opportunity. However, as explained above, the Commission considers that 
Mellanox most likely does not have  sufficient degree of market power in  Ethernet 
NICs of at least 25  Gb/s to leverage its position in order to influence the choice of 
the GPU supplier. This means that engaging in contractual tying would potentially 
expose the Merged Entity  to massive switching from customers. It is therefore 
unclear whether the Merged Entity  would have the incentive to engage in contractual 
tying involving its Ethernet NICs of at least 25  Gb/s.  
(226)  As regards InfiniBand, the Notifying Party submits that the average 2018 GPU 
dollar profit  per server was around […] times  the 2018 average InfiniBand fabric 
dollar profit per server.212 The Commission consider s that, i n all likelihood, the 
gained sales (or retained sales) on the GPU side of imposing a contractual tie 
involving its InfiniBand fabric would therefore more than compensate any lost sales 
on the network interconnect side.  
(227)  However, the Commission considers that the Merged Entity would not have the 
incentive to engage in contractual tying.  
(228)  In fact, a s regards both degradation of interoperability and contractual tying,  the 
Commission considers that the Merged Entity’s incentive to engage in such practices 
should also be assessed taking into account Intel’s and AMD’s potential counter -
strategies . On this point, the Notifying Party explained that Mellanox and NVIDIA  
absolutely depend on access to Intel ’s and AMD’s CPU roadmaps , product 
prototypes, and other early -release information in order for NVIDIA and Mellanox 
to align their roadmaps and to be able to offer solutions that support Intel ’s and 
AMD’s CPUs at the ti me those products launch.213 This is key, given that CPUs are 
at the heart of every system with which the Parties have to  interoperate , and Intel and 
AMD together account for the vast majority of CPU sales.214 According to the 
Notifying Party, if Intel and AMD  were to withhold that information, it would have 
an immediate and durable impact on Mellanox ’s and NVIDIA ’s ability to bring their 
products to market and to compete in a timely way. This would have a disciplining 
effect on the Merged Entity , eliminating a ll incentives it may have to engage in 
contractual tying or deg radation of interoperability .215 
(229)  Intel, however, claimed that NVIDIA  is not dependent on Intel roadmap information 
or product samples  and has not been an active participant in Intel’s roadmap 
programs because of its reluctance to share roadmaps with Intel. According to Intel, 
the PCIe bus facilitates communications between CPUs and other devices and 
facilitates interoperability with minimal information sharing . As regards the 
                                                 
211  Form CO, paragraph 601.  
212  Notifying Party’s response to RFI 1 5. 
213  Notifying Party’s Supplementary Submission of 9 December 2019, paragraph 47.  
214  Together, AMD and Intel account for 97% of the server CPU market (94% Intel and 3% AMD). See 
Notifying Party’s response to RFI 1 9. 
215  Notifying Party’s Supplementary Submission of 9 December 2019, paragraph 47.  
 
 
49 Mellanox’s side of the Merged Entity , Intel explains that it would not have the 
incentive to withhold information  considering the strong competition from AMD and 
ARM and the strong position of Mellanox on the network interconnect markets.216 
(230)  As regards the dependence of NVIDIA on Intel’s roadmap, the Commission 
considers that NVIDIA needs access to information from Intel to ensure 
interoperability with Intel’s newest CPUs. This is because, as explained by t he 
Notifying Party , while it is true that NVIDIA doe s not need the entirety of Intel’s  
CPU roadmap , NVIDIA needs Intel’s PCIe roadmap to ensure that NVIDIA’s 
product s, which are peripherals to Intel CPUs, are matched in capabilities and will 
interoperate with Intel’s newest CPUs. Given the lead -time to desi gn GPUs, 
NVIDIA and Mellanox need that information at least [BUSINESS SECRETS – 
Information redacted regarding business strategy]  in advance. In practice, since PCIe 
came into existence, NVIDIA has received and relied on Intel’s PCIe roadmap, 
which reveals  the PCIe generational level and production timing for Intel’s 
forthcoming CPUs. According to the Notifying Party, th is gives Intel massive power 
over NVIDIA.217 The same is true for AMD’s roadmaps: NVIDIA needs access to 
AMD’s P CIe roadmap to be able to int eroperate with AMD CPUs.218 
(231)  As regards  product samples, the Commission considers that NVIDIA rel ies on Intel 
to get advance access to Intel’s  CPU product samples in order to perform testing and 
validation of NVIDIA’s GPUs with Intel’s  CPUs. This is because, as explained by 
the Notifying Party [BUSINESS SECRETS  – Information redacted regarding 
NVIDIA’s advance access to Intel’s CPUs] .219 The same is true for AMD’s product 
samples: NVIDIA needs access to AMD’s CPU product samples in order to perform 
testing and validation of its GPUs with AMD’s CPUs. 220 
(232)  According to the Notifying Party, access to information and product samples from 
Intel and AMD is important because the CPU is the root complex of PCIe; it controls 
every computer. Intel and AMD alone decide  when to implement new levels and 
generations of PCIe. Intel and AMD decide what PCIe timing to use. Intel’s and 
AMD’s interpretation s of PCIe for their respective CPUs control and override any 
contrary view. Intel’s and AMD’s physical impl ementation s of PCIe control every 
Intel and AMD CPU -based computer.221 
(233)  According to the Notifying Party, the CPU is the one device in the ecosystem that 
indisputably rules all. A peripheral that does not operate seamlessly with Intel’s  
and/or AMD’s CPU —or fa ils to keep up with Intel’s and/or AMD’s PCIe CPU 
roadmap —is simply not marketable  to the Intel and/or AMD ecosystems .222 
(234)  Considering that Intel has a market share of 94% in the server CPU market223 and 
that CPUs equip all datacentres, the Commission considers  that interoperability with 
Intel’s CPUs is crucial for both NVIDIA’s GPUs and Mellanox’s network 
                                                 
216  Intel’s response to RFI 1, question 8.  
217  Notifying Party’s response to RFI 14, question 10.  
218  Notifying Party’s response to RFI 21 . 
219  Notifying Party’s response to RFI 14, question 10.  
220  Notifying Party’s response to RFI 21 . 
221  Notifying Party’s response to RFI 14, question 10; Notifying Party ’s response to RFI 21.  
222  Notifying Party’s response to RFI 14, question 10; Notifying Party’s response to RFI 21.  
223  Notifying Party’s response  to RFI 19.  
 
 
50 interconnect products. Furthermore, despite the 3% market share of AMD on the 
server CPU market, the Commission considers that interoperability with AMD’s 
CPU s is crucial for both NVIDIA’s GPUs and Mellanox’s network interconnect 
products. This is for the following reasons. 
(235)  First, if NVIDIA’s GPUs and Mellanox’s network interconnect products would not 
interoperate with AMD’s CPUs, this would make NVIDIA’s datac entre business 
almost entirely dependent on Intel’s PCIe roadmap and Intel CPU price, availability, 
features, quality,  
(236)  Second, the Commission considers that today, ensuring that NVIDIA GPUs and 
Mellanox’ network interconnect products interoperate with AMD CPUs is more 
important than ever because AMD’s Second -Generation EPYC CPUs (codenamed 
Rome) have rapidly emerged as the preferred CPU for high performance computing. 
AMD’s Rome CPUs are winning high -profile business throughout the datacenter 
ecosystem, including the Frontier supercomputer at Oak Ridge National Labs 
(US)224, the Archer supercomputer at the University of Edinburgh’s supercomputing 
center (EU)225, and many more.226 
(237)  Rome’s rapid success reflects several concrete advantages, which the Commission 
considers make it very important for NVIDIA and Mellanox to interoperate with 
AMD.  
(238)  First, AMD leap- frogged Intel’s CPU PCIe roadmap with Rome, the first 
commercial X86 CPU that supports PCIe Gen4.227 As explained above, NVIDIA 
must have access to AMD’s Gen4  CPUs, if it wants to develop and test NVIDIA 
GPUs with PCIe Gen4 and other PCIe Gen4 compatible peripherals including NICs, 
storage controllers, FPGAs, and others. In other words, NVIDIA cannot  market PCIe 
Gen4 products without help and access to AMD’s Ro me CPUs. The Commission 
would consider it irrational if NVIDIA were to take the risk of falling behind the 
competition when it comes to supporting PCIe Gen4.  
(239)  Second, the Commission considers that AMD EPYC’s impact on GPU opportunities 
vastly exceeds and will exceed AMD’s past market share. As explained by the 
Notifying Party, AMD EPYC is the first PCIe Gen4 CPU on the market, and each 
AMD EPYC CPU supports 128 Gen4 PCIe lanes.228 In contrast, Intel’s top end 
datacentre processor, the 2nd Gen Intel Xeon Scalable Platinum series, supports only 
48 Gen3 PCIe lanes. Even setting aside AMD’s lead in PCIe Generations, each 
AMD CPU provides 2.66 (i.e. 128/48) times as many PCIe lanes as Intel’s CPUs. 
                                                 
224  See https://www hpcwire.com/2019/05/07/cray-amd-exascale-frontier- at-oak-ridge/ .  
225 See https://www.nextplatform.com/2019/10/18/amd-cpus-will-power-uks-next-generation-archer2-
supercomputer/ .  
226 See https://www.amd.com/en/press-releases/2019- 11-18-amd-delivers-best-class-performance-
supercomputers- to-hpc-the-cloud-sc19 .  
227  Johan De Gelas, AMD Rome Second Generation EPYC Review: 2x 64-core Benchmarked, AnandTech 
(Aug. 7, 2019) (“As the first commerical x86 server CPU supporting PCIe 4.0, the I/O capabilities of 
second generation EPYC servers are top of the class.”); AMD EPYC 7002 Series Processors (“AMD 
EPYC™ is the first and only current x86 -architecture server processor supporting PCIe 4.06.”), available 
at https://www.amd.com/en/processors/epyc- 7002 -series . 
228  See AMD EPYC 7002 Series Processors (“All -in feature set”), available at 
https://www.amd.com/en/processors/epyc- 7002 -series .  
 
 
51 AMD’s advantage in PCIe lanes will translate  directly into more opp ortunities for 
PCIe peripherals, including GPUs.229 
(240)  Third, as explained by the Notifying Party, in addition to its advantages in PCIe, 
AMD Rome has other competitive advantages over Intel Xeon, including (1) twice 
the memory capacity, (2) greater memory freq uency, (3) lower power, (4) lower 
licensing costs for per socket software licenses, and (5) lower list price. As a result, 
AMD Rome is rapidly gaining server CPU market share and is far more important 
than past market share implies.  
(241)  The importance for NVI DIA to guarantee  interoperability with AMD is also 
reflected in NVIDIA’s choice to [BUSINESS SECRETS – Information redacted 
regarding new product development] .230  
(242)  Overall, the Commission considers therefore that the Merged Entity’s requirement to 
get access to Intel’s and AMD’s PCIe roadmap s and advance product samples to 
interoperate with their respective CPUs will most likely eliminate all incentives by 
the Merged Entity to degrade interoperability or engag e in contractual tying at the 
expense of Intel and AMD.  In particular, the Commission considers that Intel and 
AMD are more pivotal than Mellanox and NVIDIA in datacentres. The vast majority 
of the server CPU sales are indeed not dependent on access to Mel lanox’s InfiniBand 
fabric  (the vast majority of servers are not connected with InfiniBand) . On the other 
hand, the vast majority NVDIA’s GPUs and Mellanox’s network interconnect 
products sales depend on being interope rable with Intel’s and AMD’s CPUs. This 
conclusion also holds under the assumption of a possible narrower market for 
InfiniBand fabric or if the high -performance fabric market were to be further 
segmented by bandwidth  ranges . 
(3) As regards effects  
(243)  The Commission  considers that, even if (1) the Merged Entity  had significant market 
power in a high performance fabric market, (2) it had the ability to fully leverage 
such market power into the discrete datacentre GPU market through contractual 
tying or degradation of interoperability practices, and (3) it had the incentive to 
engage in such practices, the reduction in GPU sales prospects faced by AMD and 
Intel would be so limited that it would not lead to a reduction in Intel’s and AMD’s 
ability or incentive to compete. As explained above (in the sub -section on ability), at 
least [70-100]% of the discrete datacentre GPU market would be unaffected by any 
bundling/tying practices involving InfiniBand.  
(244)  Even if the Merged Entity  could also fully leverage its position (which the 
Commission considers unlikely)  in the market for Ethernet NICs of at least 25  Gb/s, 
at least [60-100]%  of the discrete datacentre GPU market would be unaffected by 
any bundling/tying practices involving Mellanox’s InfiniBand and Ethernet NICs of 
at least 25  Gb/s.  
(245)  Given these proportio ns, the current size of the GPU market (EUR [1 000-3 000] 
million ) and its expected growth (see above in the sub -section on ability), the 
                                                 
229  Notifying Party’s response to RFI 21. 
230  Notifying Party’ s response to RFI 21. 
 
 
52 Commission concludes that AMD and Intel would still have access to sufficient 
discrete datacentre GPU sales , and that their ability and incentive to compete would 
therefore remain unaffected. The Commission considers that in all likelihood, AMD 
and Intel will be able  to reach their minimum viable scale , even if foreclosed from 
the segment of the market linked to Mellanox’ s products (whether just InfiniBand or 
also Ethernet NICs of at least 25  Gb/s ).  
(246)  Therefore, the Commission concludes that Intel’s effective entry and AMD’s 
expansion  into the discrete datacentre GPU market will in all likelihood not be 
hindered and that th erefore competition is very unlikely to deteriorate.231 The 
Commission therefore considers that the Transaction is very unlikely to harm 
consumers, even if the Merged Entity  were to engage in any of the tying practices 
considered.232 This conclusion also holds  under the assumption of a possible 
narrower market for InfiniBand fabric or if the high -performance fabric market were 
to be further segmented by bandwidth  ranges . Irrespective of the exact market 
delineation233 from which the Merged Entity would attempt to  leverage its position, 
Intel and AMD would still be able to address most of the growing market for 
discrete datacentre GPUs , i.e. the part of the market which is unrelated to Mellanox’s 
network interconnect products.  
(247)  The conclusion that there will not be any appreciable  negative impact on customers 
is furthermore confirmed by the results of the market investigation. The vast 
majority of end  customers and OEMs expressing a view on the question consider 
that the impact of the Transaction on their company wou ld be positive or neutral  and 
that the impact of the Transaction on the intensity of competition in the discrete 
datacentre GPU market would be positive or neutral.  Moreover, the vast majority of 
                                                 
231  As explained above Intel and AMD are already competing as of today in the market for discrete datacentre 
GPUs. AMD has been present in the market for a number of years and is expanding with new products. 
Intel has announced the lau nch of its Xe GPU for datacentre by 2021. But it is already starting to compete 
today by participating in tenders, as evidenced by its recent win in the tender organised by the U.S. 
Department of Energy for the upcoming Aurora datacentre  at Argonne Nationa l Laboratory.  
232 The Non -Horizontal Merger Guidelines (paragraph 113) state that “[ i]t is only when a sufficiently large 
fraction of market output is affected by foreclosure resulting from the merger that the merger may 
significantly impede effective compet ition. If there remain effective single -product players in either 
market, competition is unlikely to deteriorate following a conglomerate merger ”. For completeness, the 
Commission however explains below why it considers that even customers in the affected segment (the 
part of the GPU sales that corresponds to GPU -accelerated servers connected with Mellanox’s 
interconnect products for which Mellanox has market power) would not be harmed. This is because, the 
Commission considers that the Merged Entity will n ot have the ability to raise GPU prices or force 
unwanted GPUs on customers solely because it will now also control Mellanox interconnect products. 
Indeed, it will generally be more profitable for Mellanox’ owners (both pre - and post -merger) to exploit 
whatever market power Mellanox may possess over its customers by directly raising interconnect product 
prices to the highest level the market will bear, rather than imposing unwanted products on customers. A 
strategy of forcing unwanted products on customers would instead reduce customers’ willingness to pay 
for GPU/interconnect combinations, and would thus diminish the rents the Merged Entity can hope to 
extract. In the absence of a realistic prospect of hampering rivals’ ability and incentive to compete, it is 
therefore unlikely that the Merged Entity could profitably impose competitive damage on customers. This 
is confirmed by the results of the market investigation, as the vast majority of end -customers declaring 
that they recently procured a cluster of GPU -accelerated servers for which Mellanox ’s InfiniBand fabric 
was the  only credible choice as a connect ion between  the servers , were not concerned that the Transaction 
may impact them negatively or that the Transaction would decrease the intensity of competition in the 
discrete datacentre GPU market . Questionnaire Q3 to End -Customers, questions 39 and 56 -57 
233  High performance fa bric, InfiniBand fabric, high performance fabric considering any bandwidth range 
possible, or even InfiniBand fabric considering any bandwidth range possible.  
 
 
53 end-customers declaring that they recently procured a cluste r of GPU -accelerated 
servers for which Mellanox ’s InfiniBand fabric was the  only credible choice as a 
connect ion between  the servers , were not concerned that the Transaction may impact 
them negatively or that the Transaction would decrease the intensity of competition 
in the discrete datacentre GPU market .234 
5.2.4.  Leveraging the position of NVIDIA in the market for discrete datacentre GPUs into 
the various network interconnect markets in which Mellanox is active  
5.2.4.1. Potential concern  
(248)  The Commission  has assessed a potential competition concern whereby the Merged 
Entity  would leverage NVIDIA’s strong position in the plausible market for discrete 
datacentre GPU into any network interconnect markets where Mellanox is active, 
and whether this would have a significant detrimental effect on competition in the se 
network interconnect markets, thus causing harm to datacentre end customers. The 
Commission h as carried out this assessment overall, rather than for each potential 
network interconnect product market that could be the target of the Merged Entity ’s 
potential leveraging strategy.  
(249)  The Commission  has assessed in particular the ability and the incentiv e of the 
Merged Entity  to engage in one o r both of the following tying/bundling practices:  
 Differentiating the degree of technical compatibility and therefore overall 
performance of its joint solution compared to mix -and-match solutions 
involving only one  of its products ("technical tying"); and/or  
 Incentivising the joint purchase of its own products by offering higher prices 
for mix-and-match solutions involving only one of its products as compared 
to the bundle ("mixed bundling").  
5.2.4.2. Notifying Party’s view  
(250)  The Notifying Party submits that the Merged Entity  will not have the ability and 
incentive  to leverage NVIDIA’s potentially strong position in the plausible market 
for discrete datacentre GPU into any network interconnect markets where Mellanox 
is active.  In any event, the Notifying Party submits that any putative leveraging 
could not lead to anticompetitive foreclosure of Mellanox’s rivals. The reasons are 
the following.  
As regards ability  
(251)  First, the Notifying Party argues that the Merged Entity  will not have the ability to 
leverage NVIDIA’s market position post -Transaction, because NVIDIA lacks 
market power in the supply of discrete datacentre GPUs.  
                                                 
234  Replies to Questionnaire Q2 to OEMs, questions 65 -66 ; Questionnaire Q3 to End -Customers, ques tions 
39 and 56 -57. For example, an end -customer “ sees the proposed acquisition of Mellanox by Nvidia as 
beneficial in terms of technology competition in the supply chain […]; Nvidia with Mellanox significantly 
broadens an important ecosystem ”. 
 
 
54 (252)  In the first place, the Notifying party argues that NVIDIA faces strong competition 
from suppliers  of othe r types of processing solutions, including CPUs, CPU -based 
accelerators such as Intel’s Xeon Phi, CPUs that integrate acceleration capabilities 
such as Intel’s Xeon Scalable CPUs, ASICs, FPGAs, as well as in -house options 
developed by CSPs  such as those de veloped by Google (TPU) and Amazon 
(Inferentia) for their respective cloud services.235  
(253)  In the second place, even on the narrow market of discrete datacentre GPUs 
identified in Section 4 , the Notifying Party argues that NVIDIA will face intense and 
increasi ng dynamic competition. The Notifying Party argues that past market shares 
are not and cannot be a good proxy for measuring current and future market power, 
in particular given the rise of AMD and the entry of Intel. According to the 
Notifying Party, toget her, AMD’s and Intel’s recent launches have created 
increasing and growing competitive pressure on NVIDIA that is not captured by 
NVIDIA’s market shares in a hypothetical GPU -only market. This pressure is 
exacerbated by AMD’s and Intel’s ability to supply and market both CPUs and 
GPUs. 236 
(254)  In the third place, the Notifying Party argues that NVIDIA’s software stack does not 
in any way protect it from these new entrants (as AMD’s market share growth 
proves). According to the Notifying Party, NVIDIA’s API, calle d CUDA, does not 
give NVIDIA market power and does not raise barriers to switching for customer 
and therefore barriers to entry for AMD and Intel.237 
(255)  In the fourth place, the Notifying Party argues that NVIDIA’s market behaviour will 
be constrained by the pr actice of the industry. Large, sophisticated datacentre 
customers seek bids from large, sophisticated OEMs/ODMs, both of which, in 
addition to organising and disciplining the actual bidding and proposal process, exert 
considerable countervailing buyer powe r.238 
(256)  Second, as regards technical tying, the Notifying Party claims that there are no 
practicable means through which the Parties could degrade interoperability.  
(257)  Third, as explained above ( see Section 5.2.3.2. ), the Notifying Party argues that the 
procurement structure of this industry precludes the ability to leverage.  
As regards incentives  
(258)  According to the Notifying Party, the Merged Entity  would also not have the 
incentive to degrade the interoperability of NVIDIA’s discrete datacentre GPUs with 
third parties’ network interconnect products or to raise NVIDIA’s GPUs’ relative 
price when combined with third party network interconnect products.  
                                                 
235  Form CO,  paragraphs 486 -494. 
236  Form CO, paragraphs 495 -502. 
237  Form CO, paragraphs 503 -504. 
238  Form CO, paragraphs 504 -505. 
 
 
55 (259)  First, as explained above, the Notifying Party argues in general terms that the Parties 
have strong commerc ial incentives to continue interoperating with other datacentre 
component suppliers, including their competitors .239 
(260)  Second, the Notifying Party argues that the cost of foreclosing suppliers of network 
interconnects  in terms of lost GPU sales would outweigh any benefit from increased 
interconnect sales . According to the Notifying Party, this is for two main reasons. In 
the first place, following a bundling strategy, a majority customers would opt to turn 
to a competing accelerator processing solution in order  to keep their preferred 
network interconnect solution. In the second place, th e reduction in GPU profits 
from losing a GPU customer far exceeds the increase in network interconnect profits 
from gaining an interconnect customer because the GPU profit per s erver is 
significantly higher than the network interconnect profit per server. As noted above, 
the average 2018 GPU dollar profit per server was around  […] the average NIC 
profit made by Mellanox per server240 and around […] InfiniBand fabric dollar profit 
per server.241 This is reinforced by the fact that OEM s can exert countervailing buyer 
power by threatening to remove NVIDIA  and Mellanox from their approved vendor 
lists.242  
(261)  Third, the Notifying Party argues that any leveraging strategy would lead to 
retaliation from Intel and AMD, which control the ecosystems attached to their 
CPUs. Moreover, the Notifying Party argues that any leveraging strategy (assuming 
the Merged Entity ’s dominance on the market for discrete datacentre GPUs ) would 
expose the Parties to antitrust scrutiny and possible follow -on litigation. This risk 
acts as a significant deterrent to carry out any putative anti -competitive foreclosure 
strategy.243 
As regards effects  
(262)  According to the Notifying Party, even on the basis of narrow market segments, the 
Transaction will not lead to anti -competitive foreclosure. First, the Notifying Party 
argues that the vast majority of datacentre interconnect sales are made to customer s 
that do not bu y NVIDIA GPUs.244 Second, the Notifying Party argues that 
NVIDIA ’s position within the putative market for discrete datacentre GPUs is 
eroding due to the entry/expansion of Intel and AMD. Therefore , not only the ability 
to leverage NVIDIA’s  posit ion becomes untenable but even assuming that the 
Merged Entity  had such ability, the fraction of network interconnect products sales 
that would be affected would be even more limited.245 
5.2.4.3. Commission’s assessment  
(263)  The Commission investigated whether the Merged Entity  would have the ability and 
the incentive to leverage its market power in the plausible market for discrete 
datacentre GPUs into any markets for Mellanox network interconnects by engaging 
                                                 
239  Form CO, paragraphs 590 -598. 
240  Notifying Party’s response to RFI 13 , question 2.  
241  Notifying Party’s response to RFI 15.  
242  Form CO, p aragraphs 599 -606. 
243  Form CO, paragraphs 611 -617. 
244  Form CO, paragraphs 668 -672. 
245  Form CO, paragraphs 673 -675 
 
 
56 in technical tying and/or in mixed  bundling practices with a v iew to foreclose its 
competitors. In summary , the Commission considers  that the Merged Entity  would 
neither  have the ability nor the  incentive to foreclose Mellanox’s competitors , and  
that in any event  such a strategy would not have anti -competitive effects.  
As regards ability  
(264)  The Commission considers  that the Merged Entity would not have sufficient  market 
power  to leverage its position in the market for discrete datacentre GPUs into the 
markets for network interconnects.  While the Merged Entity has a high market share 
of [90-100]%  in the market for discrete datacentre GPUs today, this position is being 
challenged by AMD’s expansion and Intel’s announced entry into the market. As 
shown in Table 1 above, AMD has been able to almos t triple its market share in the 
market for discrete datacentre GPUs from [0-5]% to [5-10]% between 2016 and 
2018. Moreover, as noted above in Section 5.2.2. , both AMD and Intel have 
managed to win tenders for the most performant supercomputers with their GPU 
offerings. This shows that the GPUs developed by both companies are already 
considered suitable alternatives to the ones provided by NVIDIA. Additionally,  both 
Intel and AMD also supply server CPUs246 and are able to offer both CPUs and 
GPUs to datacentr e customers. This could further increase the attractiveness of their 
GPU offerings.247  
(265)  Moreover, the majority of end customers that expressed a view consider that Intel’s 
and AMD’s discrete datacentre GPUs will probably be credible alternatives in the 
near future (i.e. in the next 2 -3 years).248 The Commission therefore considers that, 
as long as the Merged Entity will not foreclose Intel and AMD by leveraging 
Mellanox’s position in network interconnects into the GPU market,249 their 
entry/expansion in the marke t for discrete datacentre GPUs will likely significantly 
reduce NVIDIA’s market power.  
(266)  The Commission also does not  consider that NVIDIA’s CUDA software will allow 
the Merged Entity to maintain market power in the market for discrete datacentre 
GPUs. CUDA is a common API for all of NVIDA’s chips. It allows engineers to 
port applications to run, in part, on NVIDIA’s GPUs. NVIDIA develops CUDA 
libraries specifically for accelerating HPC and AI workloads. The software is not 
sold by NVIDIA, but available for d ownload.250 The majority of respondents to the 
market investigation considered that currently, the difficulty of migrating software 
written and run in the CUDA environment to other platforms constitutes a significant 
barrier  to switching from NVIDIA’s discre te datacentre GPUs to competing discrete 
datacentre GPUs.251 However, competitors have developed tools to translate or 
replace CUDA: AMD has for instance developed the Heterogeneous compute 
                                                 
246  In 2018, Intel had a market share of 94.1% and AMD a market share of 3% in server CPUs, see Notifying 
Party’s response  to RFI 19.  
247  For instance, AMD and Microsoft have announced an AMD datacentre win for Microsoft’s Azure cloud, 
in which Microsoft will deploy AMD CPUs and GPUs together: https://azure.microsoft.com/en -
us/blog/announcing -new-amd-epyc -based -azure -virtual -machines/ . 
248  Replies to Questionnaire Q3 to End C ustomers , questions 50 to 50.2.  
249  See the Commission’s assessment in Section 5.2.3.3.  
250  Notifying Party’s respo nse to RFI 4, question 14.  
251  Replies to Questionnaire Q1 to Competitors, questions 42 and 42.1; Questionnaire Q2 to OEMs, questions 
53 and 53.1; Questionnaire Q3 to End Customers, questions 48 and 48.1.  
 
 
57 Interface for Portability ( “HIP” ), an API that allows developers to create portable 
applications that can run on AMD’s accelerators as well as CUDA devices.252 Intel 
on the other hand is developing One API, a software that supports direct 
programming and API programming and will deliver a unified language and libraries 
that offer full native code performance across a range of hardware, including CPUs, 
GPUs, FPGAs and AI accelerators.253 
(267)  Therefore, the Commission considers that the ability of the Merged Entity to 
leverage its market power in the market for discrete datacentre GPUs would likely be 
limited. 
(268)  Moreover, the Commission considers that even if the Merged Entity had market 
power in the market for discrete datacentre GPUs, it would not have the ability to 
engage in technical tying and/or in mixed bundling practices  with a view to 
foreclose its competitors. The respondents to the market investigation stated that the 
Merged Entity would have the technical ability to degrade the interoperability of 
rival network interconnects with NVIDIA’s discrete  datacentre GPUs254, as well as 
the ability to offer commercial bundles including both types of components at a 
lower price than the sum of the individual components.255 However, for the reasons 
explained above in Section 5.2.3.3., mainly that GPUs and network interconnects 
need to use open source interfaces to communicate with each other as well as other 
datacentre components, and that the Parties mainly sell their products through 
OEMs, the Commission considers that the Merged Entity would not have the ability 
to engage in such practices in order to foreclose its competitors in the markets for 
network interconnects. 
As regards incentive 
(269)  The Commission considers that the Merged Entity would not have the incentive to 
engage in foreclosure p ractices towards Mellanox’s competitors. First, doing so 
would lead to a loss of GPU sales that would not be compensated by sales of 
network interconnects. This is because, as stated above in Section 5.2.3 .3., most of 
the profit per server results from GPU sales and not from network interconnect sales. 
The average 2018 GPU dollar profit per server was around […] than the average 
NIC profit made by Mellanox per server and around […] InfiniBand fabric dollar 
profit per server. 
(270)  Second, Mellanox’s most signific ant competitors for high-performance fabric both 
belong to OEMs, who would have the ability and incentive to counter any 
foreclosure attempt designed to benefit Mellanox. In particular, Cray Slingshot was 
recently acquired by HPE, who is also one of NVIDIA ’s largest OEM customers. 
HPE could delist NVIDIA’s GPUs from its approved vendor list, which would 
                                                 
252  Damon McDougall et al.,  “Introduction to AMD GPUs  programming with HIP”, 6 July 2019, available at:  
https://www.exascaleproject.org/wp-content/uploads/2017/05/ORNL HIP webinar 20190606 final.pdf . 
253  Intel, “Intel’s ‘One API’ Project Delivers Unified Programming Model Across Diverse Architectures”, 19 
June 2019, available at: https://newsroom.intel.com/news/intels-one-api-project-delivers-unified-
programming-model-across-diverse-architectures/#gs.6o2cny . 
254  Replies to Questionnaire Q1 to Competitors, questions 47 to 47.4.2; Questionnaire Q2 to OEMs, questions 
58 to 58.4.1. 
255  Replies to Questionnaire Q1 to Competitors, questions 48 to 48.4.2; Questionnaire Q2 to OEMs, questions 
59 to 59.4.2. 
 
 
58 represent a loss of at least USD […] based on HPE’s total purchases of NVIDIA’s 
Tesla GPUs in 2018. If HPE also delisted Mellanox as part of this retaliatio n, the 
Merged Entity  would lose an  additional USD […] of sales from interconnects to this 
customer .256 Accordingly, if it were to engage in such a foreclosure strategy against 
Cray Slingshot, the Merged Entity  would stand to lose a significant amount of sale s 
for both GPUs and network interconnects through HPE.  
As regards effects  
(271)  As for the effects, the Commission notes that the majority of  sales in the markets for 
datacentre network interconnects are made to datacentres that do not buy NVIDIA’s 
GPUs. B ased on the Top500 list of June 2019, only 42% ( [0-40]% based on the 
opportunity data of the Parties) of the datacentres connected with Mellanox 
InfiniBand also use GPUs.257 Similarly, only 25% ( [0-30]% based on the opportunity 
data of the Parties) of the datacen tres connected with Mellanox Ethernet NICs of at 
least 25 Gb/s also use GPUs.258 This was confirmed by the results of the market 
investigation . The OEMs and end customers that provided data on the total number 
of NICs that their company installed as part of server clusters in 2018 -2019  
confirmed that the vast majority of sales in the markets for datacentre network 
interconnect s are made to datacentres that do not buy NVIDIA’s GPUs and often are 
not accelerated at all.259 Moreover, given the entry/expansion of I ntel and AMD in 
the market for discrete datacentres GPUs, the share of network interconnect product 
sales that would be affected will likely be even more limited.  
(272)  Moreover, the Commission notes that all major competing suppliers of network 
interconnects (except Intel) considered the Transaction to have a neutral impact on 
their business260 as well as on the markets for network interconnects261. A competitor 
for network interconnects  submitted that “we hope that it will enable us to sell our 
[…] products”262 and that “as of today, the products sold by NVIDIA and 
MELLANOX are the best on the market irrespective of this transaction”263. In 
addition, the large majority of end customers that expressed a view, including a 
number of universities and research centres, considered the Transaction to have a 
positive or neutral impact on their business264 as well as on the markets for network 
interconnects265. A European research centre submitted that  “this will boost the 
network industry and perhaps will boost the EU investmen ts inside sovereign 
solution as network like processors or memories  are key technologies to master .”266 
(273)  The Commission therefore considers that any foreclosure strategy leveraging 
NVIDIA’s position in the market for discrete datacentre GPUs into the network 
                                                 
256  Form CO, paragraph 606.  
257  The other datacentres of the Top500 list connected with Mellanox InfiniBand are e ither accelerated with 
co-processors ( i.e., CPUs added in addition to the baseline CPUs), or not accelerated at all.  
258  Form CO, paragraphs 669 -672. 
259  Replies to Questionnaire Q2 to OEMs, question 60; Questionnaire Q3 to End Customers, question 53.  
260  Replies to Questionnaire Q1 to Competitors, questions 51 and 51.1.  
261  Replies to Questionnaire Q1 to Competitors, questions 52.2, 52.4 and 53.  
262  Replies to Questionnaire Q1 to Competitors, question 51.1.  
263  Replies to Questionnaire Q1 to Competitors, ques tion 52.4.  
264  Replies to Questionnaire Q3 to End customers, questions 56 and 56.1.  
265  Replies to Questionnaire Q3 to End customers, questions 57.2, 57.4 and 58.  
266  Replies to Questionnaire Q3 to End customers, question 57.4.  
 
 
59 interconnect markets would likely have no significant effect on competition in these 
markets.  
5.2.5.  Possible leakage of commercially sensitive information  
5.2.5.1. Potential concern  
(274)  Market participants explained that suppliers of datacentre components may enter into 
partnerships with suppliers of different components in order to ensure the best 
interoperability between their respective products and the best level of joint 
performance for their customers. These  arrangements are generally not formalised 
and likely vary depe nding on the companies and/or products involved . The 
companies involved  may exchange different types of information such as their 
respective roadmaps and product pans, they may set up joint validation -processes, 
they may collaborate when issues arise, etc.267 
(275)  Currently, NVIDIA and Mellanox receive information from suppliers of datacentre 
components in the context of such coop eration arrangements  enabling them to ensure 
interoperability between their respective products . Of most relevant to the present 
case, M ellanox receives information from GPU suppliers (AMD and Intel) in order 
to enable interoperability of their GPUs with Mellanox’s network interconnects, and 
NVIDIA may receive information from network interconnect suppliers in order to 
enable interoperabil ity of their network interconnects with NVIDIA’s GPUs.  
(276)  In this context, the Commission has assessed a potential concern that the Merged 
Entity  would receive  commercially sensitive information from competing GPU 
and/or network interconnect providers that the Merged Entity  could use to favour its 
own position on the GPU and/or network interconnects relevant markets.  
5.2.5.2. Notifying Party’s view  
(277)  The Notifying Party submits that the Merged Entity  will no t be able to use 
information received by Mellanox from NVIDIA’s competitors to favour its own 
position in the GPU market to  the detriment of AMD and Intel,  or to use information 
received by NVIDIA from Mellanox’s competitors to favour its own position in t he 
network interconnect markets to the detriment of rival network interconnect 
suppliers.  
(278)  First, according to the Notifying Party, while Mellanox receives substantial 
confidential information from AMD and Intel relating to their CPUs, it does not 
receive s imilar confidential /commercially sensitive  information from relating to their 
GPUs.268 The Notifying Party acknowledges that Mellanox may receive some 
information from AMD and Intel about their GPUs ( e.g., general ro admap or 
timeline information) but that in formation is not “competitively sensitive”.269 
                                                 
267  See, for example, […]. 
268  Notifying Party’s response to RFI 1 2, question 1, paragraphs 1 -2. 
269  Notifying Party’s response to RFI 12 , question 1, paragraph 4.  
 
 
60 (279)  In relation to network interconnect information,  the Notifying party  indicates that  
“NVIDIA does not obtain any confidential information from Mellanox or any other 
network interconnect supplier for the developme nt of its GPUs .”270 
(280)  Second, the Notifying Party argues that, in the event that confidential information 
were shared, GPU suppliers can protect their information via non -disclosure 
agreements (“NDAs”) restricting Mellanox’s employees from disclosing confident ial 
information to NVIDIA’s employees working on GPUs.271 Moreover, the Notifying 
Party argues that, given their level of sophistication, AMD and Intel would be able to 
negotiate broader/more restrictive NDAs with the Merged Entity  if necessary.272 
(281)  Finally, th e Notifying Party considers that rival GPU suppliers have different means 
to retaliate if the Merged Entity  were to share their commercially sensitive 
information  internally. First, t hey could use the legal grounds provided for by the 
NDAs concluded with t he Parties ( e.g., fast -track dispute mechanisms). Second, 
since information about CPUs is critical for Mellanox, AMD and Intel could stop (or 
threaten to stop) providing such information. Finally, the Notifying Party notes that, 
if Mellanox were to share i nformation with the NVIDIA side of the Merged Entity  in 
violation of an NDA, this would greatly affect the Merged Entity ’s credibility in the 
market.273 
5.2.5.3. Commission’s assessment  
(1) Possible leakage of GPU competitors’ commercially sensitive information  
(282)  The resul ts of the market investigation revealed a concern relating to the possible 
leakage within the Merged Entity  of commercially sensitive information shared by 
competing GPU vendors. In particular, post -Transaction, the Merged Entity ’s 
networking division coul d make this information accessible to the Merged Entity ’s 
GPU division, which could potentially misuse it to favour the Merged Entity 's own 
GPUs to the detriment of competing GPU suppliers.274 
(283)  Therefore, the Commission has considered whether the Merged Entit y could leak 
and misuse the commercially sensitive information that the Mellanox side of the 
business may receive from GPU suppliers to favour the NVIDIA side of the business 
on the market for discrete GPUs for datacentre.  
(284)  As regards ability to foreclose , first, the confidentiality concern, as expressed by 
some third parties, is based on the premise that GPU suppliers willing to cooperate 
with Mellanox to ensure the interoperability of their GPUs with Mellanox’s network 
interconnects must share information on their GPUs that is confidential or 
commercially sensitive. They fear that this information could be used to their 
disadvantage by the GPU side of the Merged Entity . Therefore, t he Commission  first 
                                                 
270  Notifying Party’s response to RFI 13 , question 1.  
271  Notifying Party’s response to RFI 12 , question 1, paragraphs 14 -15. 
272  Notifying Party’s response to RFI 12 , question 1, paragraph 20.  
273  Notifying Party’s response to RFI 12 , question 1, paragraphs 22 -29. 
274  Replies to Questionnaire  Q1 to C ompetitors , questions 49.3 and 49.3.1. See also agreed minutes of the 
conference call  of 9 August 2019 with AMD, paragraph 35, and Intel’s submission of 10 September 2019 
entitled “Intel response to case team’s query regarding foreclosure mechanism resulting from NVIDIA’s 
acquisition of Mellanox”, p. 5.  
 
 
61 assessed whether, based on the information currently exc hanged, the Merged Entity  
could have access to competitors’ commercially sensitive information received in the 
context of cooperation arrangements with the latter.  
(285)  A majority of the respondents to the market investigation  that expressed a view 
suggested th at, when cooperating with Mellanox to ensure interoperability of their 
products with the latter’s  network interconnects, they provide  commercially sensitive 
information ( e.g., product roadmaps) about their company’s acceleration products.275 
(286)  More specificall y, AMD explained that, under its cur rent partnership with Mellanox, 
both companies […].276 […].277 Similarly, Intel is concerned that “[t] o the extent that 
the Merged E ntity’s networking division cooperates with Intel and other suppliers of 
acceleration produc ts, it will gain access to confidential information regarding their 
products’ designs and roadmaps .”278 
(287)  However , the Notifying Party refutes these claims and argues that Mellanox only 
receives limited information from GPU suppliers,279 but not “any meaningful 
competitively sensitive information about AMD and Intel’s product development 
plans, roadmaps, or product specifications for their GPUs, nor does it expect to 
going forward ”.280 
(288)  Contrary to competitors’  claims, the Notifying Party explains that “ as a rule [AMD 
and Intel]  do not share GPU information with Mellanox that might be competitively 
sensitive as it relates to NVIDIA. ” The information that they may share (such as 
general roadmap or timeline information ) is “equivalent to what they already 
disclose at i ndustry conferences and product announcements ”.281 This information is 
“not competitively sensitive, and access to [it] would not confer an advantage to 
NVIDIA. ”282  
(289)  For example, Mellanox does not receive detailed, pre -release product information on 
GPUs, and AMD and Intel do not have “early access programmes” (through which 
they would provide Mellanox with prototype products or detailed product 
specifications) or “roadmap alignment” discussions with Mellanox about their 
GPUs.283 Similarly, as regards  information  shared during the product testing and 
validation phase, it concerns “ products that are already available, not confidential, 
pre-release products from those suppliers ”284, which, according to the Notifying 
Party , does not constitute “ competitively sensitive information regarding future or 
                                                 
275  Replies to Questionnaire Q1 to C ompetitors , questions 49 and 49.1.  
276  See agreed minutes of the conference call of 9 August 2019 with AMD, paragraph 27.  
277  […].  
278  Intel’s submission of 10 September 2019 entitled “Intel response to case team’s query regarding 
foreclosure mechanism resulti ng from NVIDIA’s acquisition of Mellanox”, p. 5.  
279  Notifying Party’s response to RFI 12, question 1, paragraph 13.  
280  Notifying Party’s response to RFI 12, question 1, paragraph 12.  Similarly, the Notifying Party argues that 
“there is no history of AMD or  Intel sharing sensitive information with Mellanox about their GPU 
products that actually would be competitively meaningful to NVIDIA ”, see Notifying Party’s response to 
RFI 12, question 1, paragraph 9.  
281  Notifying Party’s response to RFI 12 , question 1, paragraph 4.  
282  Notifying Party’s response to RFI 12 , question 1, paragraph 1.  
283  Notifying Party’s response to RFI 12 , question 1, paragraph 4.  
284  Notifying Party’s response to RFI 12 , question 1, paragraph 8.  
 
 
62 current GPUs .”285 In fact , “AMD or Intel could do the testing and validation 
themselves, without sharing any information with Mellanox at all ”.286 
(290)  The Parties  have illustrated their arguments by analysing  historic information sh ared 
between them relating to GPUs. This analysis revealed that [BUSINESS SECRETS  
– Information redacted regarding information that is not shared between NVIDIA 
and Mellanox]. Any discussions regarding design and interoperability issues with 
respect to particular customers between the Parties, [BUSINESS SECRETS  – 
Information redacted regarding information that is not shared between NVIDIA and 
Mellanox] .287 
(291)  Furthermore , the Notifyi ng Party explains that, in any event, AMD and Intel  do not 
need to provide such information to Mellanox.288 While access to this type of 
information is “critical” for Mellanox and other datacentre component providers in 
relation to CPUs (given their central role in datacentre equipment), “ Mellanox does 
not need similar advanced information from GPU suppliers ” because its “ own 
product development plans and roadmaps do not depend on technical details from 
the GPU suppliers. ”289 This is so because Mellanox’s netwo rk interconnects operate 
with GPUs via PCIe such that “ there is no real need for AMD and Intel to share pre -
release product information about their GPUs [...] for Mellanox to interoperate with 
those products ".290 
(292)  Based on the Notifying Party’s submissions an d the market investigation, the 
Commission has established that, on balance, it is unlikely that the Merged Entity  
will be in a position to obtain commercially sensitive information from rival GPU 
suppliers that it could use to favour its own GPUs’ positio n to the detriment of AMD 
and Intel. In any event, as explained below, even if the merged company had access 
to such strategically important confidential information, AMD and Intel would have 
ways to protect their information.  
(293)  Second,  based on the Notifyin g Party’s submissions and the market investigation, 
the Commission has established that, in the industry concerned in the present case, 
companies cooperating with each other generally rely on certain safeguards to 
protect their confidential and commerciall y sensitive information, notably though 
NDAs.  
(294)  However , according to a few market participants, the currently applicable  NDAs 
would likely not be sufficient to prevent Mellanox’s business employees from 
sharing their commercially sensitive information with  NVIDIA’s business post -
Transaction.291 Intel submits that “ Intel has standard NDAs in place with Mellanox 
that place little controls on how the information could be shared with Nvidia .”292 
                                                 
285  Notifying Party’s response to RFI 12 , ques tion 1, paragraph 1.  
286  Notifying Party’s response to RFI 12 , question 1, paragraph 8.  
287  Notifying Party’s response to RFI 12 , question 1, paragraphs 6 -7. 
288  Notifying Party’s response to RFI 12 , question 1, paragraph 13.  
289  Notifying Party’s response to RFI 12 , question 1, paragraph 5.  
290  Notifying Party’s response to RFI 12 , question 1, paragraph 5.  
291  Replies to Questionnaire Q1 to Competitors, question 49.2.  
292  Intel’s r eply to Questionnaire Q1 to Competitors, question 49.2.1.  
 
 
63 Similarly, AMD considers that “AMD’s non -disclosure agreements with Me llanox  
[…].”293 
(295)  The Notifying Party contests these findings and submits that GPU suppliers can 
protect their information through industry standard NDAs. According to the 
Notifying Party, the NDAs currently in place between Mellanox and AMD on the 
one hand, and Mellanox an d Intel on the other, “ at a minimum  […] would prevent 
Mellanox from misusing any information that these suppliers provide ”.294 Therefore, 
even if GPU suppliers were to provide commercially sensitive information to the 
Merged Entity , this information “ could n ever be provided to NVIDIA’s GPU 
engineers as it would be covered by industry -standard NDAs .”295  
(296)  One large OEM confirmed the view that the safeguards currently in place are 
sufficient, as many players in this industry are “ vertically integrated or 
conglomer ated in ways that require proper protections and firewalls on information 
use.”296 
(297)  The Notifying Party explains that, under the NDAs entered into by Mellanox with 
various datacentre component suppliers , “[…]” “ Mellanox takes these obligations 
seriously. Disclosure of confidential information would not only result in Mellanox 
breaching its legal obligation, but it would have serious repercussions on 
Mellanox’s business relationship with its partners. ”297 
(298)  In particular, the Notifying Party argues that, curren tly, NVIDIA and Mellanox rely 
on such safeguards to prevent Intel or AMD to use the information the former 
provide to the latter in order to ensure interoperability between NVIDIA’s GPUs and 
Mellanox’s network interconnects on the one hand and AMD’s and In tel’s CPUs on 
the other. As they offer  products competing with the Parties’ products, AMD and 
Intel could use the information they received via their CPU business in order to 
favour their own network interconnect or GPU products (similarly to what AMD and 
Intel argue the Merged Entity would be able to do post -Transaction).298 
(299)  To illustrate their arguments, t he Parties provided to the Commission NDAs entered 
into by Intel in relation to information received from the Parties, which they argue is 
relevant becaus e Intel supplies GPUs and network interconnects and, therefore, 
competes with the Parties. These NDAs are therefore likely to contain provisions 
ensuring the protection of information provided by the Parties about products with 
which Intel compete s.299 For e xample, the Parties refer to  the […]. This NDA states 
that the receiving party must, among other things,  “[…]”.300 This suggests that Intel 
considers this type of NDA to be sufficient to protect this type of confidential 
information today.301 
                                                 
293  AMD’s reply  to Questio nnaire Q1 to Competitors, question 49.2.1.  
294  Notifying Party’s response to RFI 12 , question 1, paragraph 1.  
295  Notifying Party’s response to RFI 12 , question 1, paragraph 14.  
296  Reply from a large competitor to Questionnaire Q1 to C ompetitors , question 49.2.1.  
297  Notifying Party’s response to RFI 12 , question 2.  
298  Notifying Party’s response to RFI 12 , question 1, paragraphs 17 -18. 
299  Notifying Party’s response to RFI 12 , question 2.  
300  Mellanox’s internal document, […], clauses 3.1 and 3.2 (Annex RFI 10 -3.16).  
301  Notifying Party’s response to RFI 12 , question 2.  
 
 
64 (300)  In any event , the Commission considers that, if AMD and Intel  believe that the 
currently applicable NDAs do not sufficiently safeguard their information post -
Transaction, they could negotiate more restrictive NDAs with the Merged Entity. 
[…].302 
(301)  The Commission considers  that AMD’s and Intel’s negotiation power is credible 
because they  are both large, sophisticated companies that already cooperate  – and 
enter into this type of agreements – with a large number of companies, including 
NVIDIA and Mellanox, notably in relatio n to their CPUs.303 They are used not only 
to using NDAs as a tool to protect their own information, but also as using NDAs in 
situation where they could receive information regarding products with which they 
compete ( e.g., if they receive information from M ellanox on network interconnect in 
the context of interoperability with CPUs, while they also supply network 
interconnect themselves).  
(302)  In light of these considerations, the Commission considers that, on balance, the 
Merged Entity  will likely not have the a bility to obtain commercially sensitive 
information from GPU suppliers. Even if the Merged Entity  had access to such 
information, any foreclosure strategy would be limited to its InfiniBand fabric.  
(303)  As regards incentives to foreclose , the Commission has assessed whether the 
Merged Entity  would have an incentive to leak (and misuse ) the potentially 
commercially sensitive information received by the network interconnect side of the 
business from rival GPU suppliers to favour its own position on the discrete 
datacentre GPU market.  
(304)  First, the Commission considers that the Merged Entity’s incentive to engage in such 
practices should be assessed taking into account Intel’s and AMD’s potential 
counter -strategies. On this point , the Notifying Party submits that, in the event that  
Mellanox received commercially sensitive information from rival GPU suppliers and 
shared such information with NVIDIA, AMD and Intel could withhold CPU 
information. As explained in more details  in paragraphs 228 to 233, the Notifying 
Party  submits this would have an immediate and durable impact on Mellanox’s 
ability to bring its products to market and to compete in a timely way  because  
Mellanox absolutely depends on access to Intel ’s and AMD’s CPU roadmaps , 
product prototypes, and other ear ly-release information in order for Mellanox to 
align its roadmaps and to be able to offer solutions that support Intel and AMD’s 
CPUs at the time those products launch .304 As the Parties put it, “[t] his dependency 
gives AMD and Intel a natural disciplining force how Mellanox and NVIDIA handle 
their confidential information .”305 
(305)  On the contrary, Intel claims  that it would not be able to adopt such a counter -
strategy , as this “ would be damaging to Intel’s own interest ”.306 This is due  in 
particular to the fact tha t Mellanox’s network interconnects are used in numerous 
CPU -based platforms (for which Intel is a leading provider), and that failing to 
                                                 
302  […]. 
303  Notifying Party’s response to RFI 12 , question 1.  
304  Notifying Party’s Supplementary Submission of 9 December 2019, paragraph 47.  
305  Notifying Party’s response to RFI 12 , question 1, paragraph 25.  
306  Intel’s response  to RFI 1, question 8.  
 
 
65 enable Mellanox while rival CPU vendors support its solutions would cause Intel to 
lose CPU sales.307 
(306)  However, as discuss ed in Section  5.2.3.3,  overall, the Commission considers that the 
Merged Entity’s requirement to get access to PCIe roadmap s and advance product 
samples of CPU suppliers – in particular Intel and AMD – to interoperate with their 
CPUs will most likely  eliminate all incentives by the Merged Entity to engage in to 
the potential leaking of AMD’s and Intel’s commercially sensitive information about 
their GPUs to favour its own position on the discrete datacentre GPU market, at  the 
expense of Intel and AMD .  
(307)  Second, Intel and AMD could also decide to stop cooperating with – and therefore 
providing information about their GPUs to – Mellanox. As explained above , there 
are a sufficient number of alternative suppliers of Ethernet NICS of at least 25 Gb/s 
with who m GPU suppliers could cooperate instead of Mellanox. As for InfiniBand, 
both Intel and AMD could in principle team up with Cray, which, with its Slingshot 
fabric, at least from a technical point of view, is emerging as a credible alternative to 
Mellanox’s InfiniBand in the short term.308 
(308)  Finally , assuming that GPU suppliers do – and will continue to – provide 
commercially sensitive information to Mellanox, the Parties explained that “[i] f 
Mellanox provided this information to NVIDIA in violation of an NDA and  this fact 
became known, this would greatly impact Mellanox’s credibility in the market ”. This 
would , for example, discourage  datacentre component vendors (such as switch 
suppliers) from continuing to provide information that they currently provide to 
Mell anox for interoperability purposes.309 
(309)  Therefore, b ased on the Notifying Party’s submission s, the Commission considers 
that any leak of confidential or commercially sensitive information from Mellanox to 
NVIDIA, post -Transaction, would severely damage Mellan ox’s relationship with 
other market players and undermine its reputation in the market. As a result, the 
Merged Entity  can be expected to put in place safeguards preventing such leak.  
(310)  In light of these considerations, the Commission considers that the Merg ed Entity  
will likely not have the incentive to leak (and misuse) GPU suppliers’ potentially 
commercially sensitive information received by Mellanox (if any) to favour its own 
position on the discrete datacentre GPU market.  
(311)  As regards effects , the Commissi on has assessed whether a strategy whereby the 
Merged Entity  would refuse to enter into enhanced NDAs with AMD and Intel or 
leak (and misuse ) their  GPU information  would have any effect  on competition in 
the discrete datacentre GPU market.  
(312)  The Commission considers that, even if the Merged Entity  (i) had access to AMD’s 
and Intel’s commercially sensitive information through their cooperation with 
Mellanox, (ii) passed on such information to the NVIDIA side of the business and 
(iii) misused th is information in order to favour its own position in the discrete 
                                                 
307  Intel’s response to RFI 1, question 8.  
308  See paragraph 187.  
309  Notifying Party’s response to RFI 12 , question 1, paragraph 28.  
 
 
66 datacentre GPU market, the reduction in GPU sales prospects faced by AMD and 
Intel would be so limited that it would not lead to a reduction in Intel’s and AMD’s 
ability or incentive to com pete. As explained in Section 5.2.3.3 , at least [70-100]% 
of the discrete datacentre GPU market (in terms of value) would be unaffected by 
any foreclosing practices involving InfiniBand.  
(313)  Furthermore, even if the Merged Entity  could also fully leverage its position (which 
the Commission considers unlikely) in the market for Ethernet NICs of at least 25  
Gb/s, at least [60-100]% of the discrete datacentre GPU market would be unaffected 
by any such strategy involving Mellanox’s InfiniBand and Ethernet NICs of a t least 
25 Gb/s.  
(314)  Consequently, t he Commission considers that in all likelihood, AMD and Intel will 
be able, even if foreclosed from the segment of the market linked to Mellanox’s 
products (whether just InfiniBand or also Ethernet NICs of at least 25  Gb/s),  to reach 
their minimum viable scale.  
(315)  The Commission concludes that Intel’s effective long -term entry and AMD’s 
expansion into the discrete datacentre GPU market will in all likelihood not be 
hindered and that therefore competition is very unlikely to dete riorate. The 
Commission therefore considers that the Transaction is very unlikely to harm 
consumers, even if the Merged Entity  were to engage in the practice  considered.  
(316)  Conclu sion. In light of the above considerations, the Commission considers that the 
Transaction does not raise serious doubts as to its compatibility with the internal 
market or the functioning of the EEA Agreement with respect to the risks of possible 
leakage (and misuse ) by the Merged Entity  of rival GPU suppliers’ potentially 
commerciall y sensitive information provided to the Merged Entity . 
(2) Possible leakage of network interconnect competitors’ commercially sensitive 
information  
(317)  The Commission has also considered whether the Merged Entity  could leak and 
misuse the information that NVIDIA may receive from network interconnect 
suppliers to favour Mellanox on the relevant network interconnect markets.  
(318)  The Commission has established that the Merged Entity  would have neither the 
ability nor the incentive to adopt such a strategy, for the follow ing reasons.  
(319)  First, the Notifying Party submits that “ NVIDIA does not obtain any confidential 
information from Mellanox or any other network interconnect supplier for the 
development of its GPUs .” In fact, “ NVIDIA does not need such information and has 
always developed its GPUs without it. Therefore, there  is no information NVIDIA 
receives that the Merged E ntity could use ‘to advantage Mellanox’s network 
interconnect products over competing products ’”.310 
(320)  The results of the market investigation did not contra dict this fact.  While a few 
competitors indicated that they share commercially sensitive information with 
                                                 
310  Notifying Party’s response to RFI 13 , question 1.  
 
 
67 NVIDIA  in the context of cooperation arrangements , their answers appear  to relate 
to information about processors rather than network interconnects.311 
(321)  Second, the market investigation provided mixed views as to whether there are 
sufficient safeguards in place to ensure preservation of the confidentiality of the 
information provided by network interconnect suppliers to NVIDIA.312 In any event, 
the considera tions mentioned  in paragraphs 293 to 301 relating to the use of NDAs 
between GPU suppliers and Mellanox , also appl y in relation to the information 
shared between network interconnect suppliers and  NVIDIA . 
(322)  Third , in Section 5.2.4.3, the Commission considers that the Merged Entity  would 
not have enough  market power to leverage its position in the market for  discrete 
datacentre GPU into the markets for network interconnects.  
(323)  Similarly, the Commission takes the position that the Merged Entity would not have 
sufficient market power to engage into a strategy regarding the potential leakage of 
network interconnect competitors’ commercially sensitive information to favour its 
own network interconnects.313 As explained in more details in paragr aph 264, while 
the Merged Entity has a high market share of [90-100]% in the market for discrete 
datacentre GPUs today, AMD’s expansion and Intel’s announced entry into the 
market challenge this position. Intel and AMD are already competing as of today in 
the market for discrete datacentre GPUs and have recently won tenders for the most 
performant supercomputers with their GPU offerings. Their GPUs already are 
considered as suitable alternatives to the ones provided by NVIDIA. Therefore, the 
ability of the Merged Entity to leverage its market power in the market for discrete 
datacentre GPUs would likely be limited.  
(324)  Since AMD’s and Intel’s GPUs constitute alternatives to NVIDIA’s GPUs, network 
interconnect suppliers such as Broadcom, Intel, Marvell and Chelsi o will have the 
possibility to team up with AMD and/or Intel, instead of the Merged Entity. It 
follows that if these network interconnect suppliers consider that the NDAs in place 
or those offered by the Merged Entity do not sufficiently safeguard their in formation, 
they will likely be in a sufficiently strong position to negotiate more restrictive 
NDAs, notably by threatening to shift away from NVIDIA’s GPUs. Further, the 
Commission considers that, even if they were not able to  negotiate  more protecting 
NDAs, they could decide to stop cooperating with the Merged Entity  and focus on 
cooperating with Intel and AMD as regards the interoperability of their network 
interconnects with GPUs.  
(325)  Fourth, the Commission considers that such a strategy would likely not ha ve 
significant effect on competition in the markets for network interconnects. As 
explained in paragraph 262, the Notifying Party argues that the vast majority of 
interconnect sales are made to datacentres that do not buy NVIDIA GPUs.314 The 
market investiga tion confirmed that the vast majority of interconnect sales are made 
                                                 
311  Replies to Questionnaire  Q1 to C ompetitors , questions 50 and 50.1.  
312  Replies to Questionnaire Q1 to C ompetitors, questions 50.2 and 50.2.1.  
313  Non-Horizontal Merger Guidelines, paragraph 99.  
314  Based on the Top500 list of June 2019, only 42% ( [0-40]% based on the op portunity data of the Parties) of 
the datacentres connected with Mellanox InfiniBand also use GPUs. Similarly, only 25% ( [0-30]% based 
on the opportunity data of the Parties) of the datacentres connected with Mellanox Ethernet NICs of at 
least 25 Gb/s also  use GPUs. See Form CO, paragraphs 666 -672. 
 
 
68 to datacentres that do not buy NVIDIA’s GPUs and often are not accelerated at 
all.315 Moreover, given the imminent entry/expansion of Intel and AMD in the 
market for discrete datacentres GP Us, the share of network interconnect product 
sales that would be affected will likely be even more limited  (see paragraph 271) . 
(326)  Finally, during the market investigation, no competitor raised clear substantiated 
concerns regarding the potential misuse of t heir confidential information relating to 
their network interconnects to impair their efforts to compete with Mellanox. 316 
(327)  In light of the above considerations, the Commission considers that the Transaction 
does not raise serious doubts as to its compatibility with the internal market or the 
functioning of the EEA Agreement with respect to the risks of misuse by Mellanox 
of co mpeting network interconnect suppliers’ potentially commercially sensitive 
information provided to the Merged Entity . 
5.3. Vertical non -coordinated effects  
5.3.1.  Legal framework  
(328)  The Non -horizontal Merger Guidelines recognise  that non -horizontal concentrations 
are generally less likely to significantly impede effective competition than horizontal 
concentrations.317 
(329)  Vertical non -coordinated effects may principally arise when non -horizontal 
concentrations give rise to foreclosure,318 which occurs where actual or potenti al 
rivals’ access to supplies or markets is hampered or eliminated as a result of the 
merger, thereby reducing these companies’ ability and/or incentive to compete. Such 
foreclosure may discourage entry or expansion of rivals or encourage their exit. Such 
foreclosure is regarded as anti -competitive where the Merged E ntity — and, 
possibly, some of its competitors as well — are as a result able to profitably increase 
the price charged to consumers.319 
(330)  The Non -Horizontal Merger Guidelines distinguish between two  forms of 
foreclosure. Input foreclosure occurs where the merger is likely to raise the costs of 
downstream competitors by restricting their access to an important input. Customer 
foreclosure occurs where the merger is likely to foreclose upstream competit ors by 
restricting their access to a sufficient customer base.320 
(331)  In assessing the likelihood of an anticompetitive foreclosure scenario, the 
Commission examines, first, whether the Merged Entity  would have, post -merger, 
the ability to substantially foreclos e access to inputs or customers, second, whether it 
would have the incentive to do so, and third, whether a foreclosure strategy would 
have a significant detrimental effect on competition.321 
                                                 
315  Replies to Questionnaire Q2 to OEMs, question 60 ; Questionnaire Q3 to End C ustomers, question 53.  
316  Replies to Questionnaire Q1 to C ompetitors , questions 50.3 and 50.3.1.  
317  Non-Horizontal Merger Guidelines, paragraph 11.  
318  Non-Horizontal Merger Guidelines, paragraph 18.  
319  Non-Horizontal Merger Guidelines, paragraph 29.  
320  Non-Horizontal Merger Guidelines, paragraph 30.  
321  Non-Horizontal Merger Guidelines, paragraph 32.  
 
 
69 (332)  As regards ability to foreclose, input foreclosure may lead to com petition problems 
if the upstream input is important for the downstream product and if the vertically 
integrated Merged Entity  has a significant degree of market power in the upstream 
market. It is only in those circumstances that the Merged Entity  can be expected to 
have significant influence on the conditions of competition in the upstream market 
and thus, possibly, on prices and supply conditions in the downstream market.322 
(333)  As for customer foreclosure, it is a concern when it involves a company which is a n 
important customer with a significant degree of market power in the downstream 
market. If, on the contrary, there is a sufficiently large customer base, at present or in 
the future, that is likely to turn to independent suppliers, the Commission is unlik ely 
to raise competition concerns on that ground.323 
(334)  With respect to incentives to foreclose, the incentive of the Merged Entity  to 
foreclose depends on the degree to which foreclosure would be profitable. In relation 
to input foreclosure, the Merged Entity  faces a trade -off between the profit lost in the 
upstream market due to a reduction of input sales to rivals and the profit gain, in the 
short or longer term, from expanding sales downstream or, as the case may be, being 
able to raise prices to consumers.324 In relation to customer foreclosure, the trade -off 
is between the possible costs associated with not procuring products from upstream 
rivals and the possible gains from doing so, for instance, because it allows the 
Merged Entity  to raise price in the upst ream or downstream markets.325 
(335)  As regards the effects on competition, input foreclosure raises competition concerns 
when it leads to increased prices on the downstream market.326 If there remain 
sufficient credible downstream competitors whose costs are not li kely to be raised, 
competition from those firms may constitute a sufficient constraint on the Merged 
Entity  and therefore prevent output prices from rising above pre -merger levels.327 
(336)  By denying competitive access to a significant customer base for the forec losed 
rivals’ (upstream) products, the merger may reduce their ability to compete in the 
foreseeable future. As a result, rivals downstream are likely to be put at a 
competitive disadvantage ( e.g., raised input costs), which may allow the Merged 
Entity  to profitably raise prices or reduce the overall output on the downstream 
market.328 If there remain a number of upstream competitors that are not affected, 
competition from those firms may be sufficient to prevent prices from rising in the 
upstream market and,  consequently, in the downstream market.329 
5.3.2.  Affected markets  
(337)  Pre-Transaction, all NVIDIA’s DGX servers include Mellanox InfiniBand 
interconnects. Therefore, there is a vertical relationship between NVIDIA’s 
                                                 
322  Non-Horizontal Merger Guidelines, paragraphs 34 -35. 
323  Non-Horizontal Merger Guidelines, paragraph 61.  
324  Non-Horizontal Merger Guidelines, paragraph 40.  
325  Non-Horizontal Merger Guidelines, paragraph 68.  
326  Non-Horizontal Merger Guidelines, paragraphs 47 -49. 
327  Non-Horizontal Merger Guide lines, paragraph 50.  
328  Non-Horizontal Merger Guidelines, paragraph 72.  
329  Non-Horizontal Merger Guidelines, paragraph 74.  
 
 
70 downstream presence in datacentre servers and Mella nox’s upstream supply of 
datacentre network interconnects.  
(338)  NVIDIA is active in the datacentre server market, while Mellanox is active in the 
various network interconnect markets (depending on the exact segmentation), which 
are vertically related markets. A vertically affected market therefore arises in relation 
to the supply of network interconnects (upstream), which are an input for datacentre 
servers (downstream).  
(339)  Tables 4 and 5 below present NVIDIA’s and its competitors’ market shares in the 
potential market for datacenter servers and in the potential ly narrower  market for 
mid-range servers.  
Table 4: Value market shares in datacentre servers , worldwide, 2016 -2018330 
Vendor  2016  2017  2018  
Dell EMC  [10-20]% [10-20]% [20-30]%  
HPE  [20-30]%  [20-30]%  [10-20]% 
Self Build/ODM  [5-10]%  [5-10]%  [10-20]% 
Inspur Electronics  [0-5]% [5-10]%  [5-10]%  
IBM  [5-10]%  [5-10]%  [5-10]%  
Lenovo  [5-10]%  [5-10]%  [5-10]%  
Huawei  [5-10]%  [5-10]%  [5-10]%  
Cisco  [5-10]%  [5-10]%  [5-10]%  
Fujitsu  [0-5]% [0-5]% [0-5]% 
Oracle  [0-5]% [0-5]% [0-5]% 
Sugon  [0-5]% [0-5]% [0-5]% 
H3C  [0-5]% [0-5]% [0-5]% 
NEC  [0-5]% [0-5]% [0-5]% 
NVIDIA  [0-5]% [0-5]% [0-5]% 
Others  [5-10]%  [5-10]%  [5-10]%  
Total  100%  100%  100%  
Source: Gartner , NVIDIA  actual sales data  
  
                                                 
330  Form CO, Table 6.  
 
 
71 Table 5: Value market  shares in  mid-range  servers , worldwide, 2016 -2018331 
Vendor  2016  2017  2018  
IBM  [40-50]% [40-50]% [30-40]% 
HPE  [10-20]%  [20-30]% [20-30]% 
NVIDIA  [0-5]% [0-5]% [10-20]% 
Oracle  [10-20]%  [10-20]%  [10-20]%  
Fujitsu  [0-5]% [0-5]% [5-10]%  
NEC  [0-5]% [0-5]% [0-5]% 
Huawei  [0-5]% [0-5]% [0-5]% 
Inspur Electronics  [0-5]% [0-5]% [0-5]% 
Others  [10-20]%  [10-20]%  [0-5]% 
Total  100%  100%  100%  
Source: Gartner, NVIDIA actual sales data  
(340)  This vertical link is affected because of the market shares of Mellanox, which are 
above 30% in the upstream markets  for high performance fabric ([60 -70]% in 2018) 
and Ethernet NICs of at least 25 Gb/s ( [60-70]% in 2018), as illustrated in Tables 2 
and 3 (Section 5.2.2  above ). In all other plausible network interconnect market 
segments, Mellan ox’s market share is significantly lower than 30%.332 
(341)  As NVIDIA is active in the market for datacent re servers, which is vertically related 
to both the markets for high -performance fabric and for Ethernet NICs of at least 25 
Gb/s, it can be concluded that both the datacent re server market as well as the 
markets for high -performance fabric and for Ethernet NICs of at least 25 Gb/s are 
affected.  
(342)  In this decision, the Commission assesses whether the Transaction would likely 
confer on the Merged Entity the ability and incentive to implement an input 
foreclosure (Section 5.3.3) and/or a customer foreclosure (Sec tion 5.3.4) strategy 
with regard to Mellanox’s high -performance fabric and Ethernet NICs of at least 25 
Gb/s.  
5.3.3.  Input foreclosure  
5.3.3.1. Potential concern  
(343)  The Commission has assessed the ability and incentive of the Merged Entity  to 
foreclose competing datacentre s erver suppliers by restricting their access to 
potentially critical inputs, i.e., Mellanox’s high performance fabric and Ethernet 
NICs of at least 25 Gb/s. In particular, the Commission has investigated whether the 
Merged Entity  could engage in one or both of the following input foreclosure 
strategies:  
 Raising the price of Mellanox’s high performance fabric and Ethernet NICs 
of at least 25 Gb/s when sold to OEMs/end -customers to be incorporated into 
third party  datacentre  servers, compared to when they are sold as part of 
                                                 
331  Form CO, Table 21.  
332  See paragraph 148  and footnote 136 . 
 
 
72 NVIDIA’s DGX servers (thereby incentivising the purchase of the latter);  
and/or  
 Degrading the quality of Mellanox’s high performance fabric and Ethernet 
NICs of at least 25 Gb/s offered to third parties to be incorporated in third 
party datacentre servers and/or their compatibility with non -DGX servers . 
5.3.3.2. The Notifying Party’s views  
(344)  The Notifying Party claims that the Merged Entity  will lack both the ability and the 
incentive to foreclose access to Mellanox’s network interconnects to competing  
downstream datacentre server suppliers by refusing to supply Mellanox’s products to 
them or by degrading their performance with non -NVIDIA datacentre servers.  
As regards ability  
(345)  First, the Notifying Party submits that the Merged Entity  will not be in a po sition to 
target and discriminate against rival datacentre server suppliers when supplying 
network interconnects because sales of datacentre products are largely carried out 
through intermediaries. Therefore, suppliers generally do not know who the end 
customers are.333 
(346)  Second, the Notifying Party argues that Mellanox lacks market power in any 
upstream market for network interconnects .334 
(347)  Third, according to the Notifying Party, Mellanox faces – and will continue to face – 
strong competitive constraints on any plausible markets for network interconnects. 
Moreover, only about [10-20]% of all datacentre servers use Mellanox’s network 
interconnects.335 
(348)  Finally, the Notifying Party submits that datacentre server customers’ countervailing 
bargaining power would enable them to divert GPU purchases away from NVIDIA 
as a response to any hypothetical input foreclosure strategy.336 
As regards incentives  
(349)  The Notifying Party submits that the Merged Entity  will lack the incentive to 
foreclose sales of Mellanox’s network interconn ects when sold to be incorporated in 
third party datacentre servers in order to increase sales of its own DGX servers.  
(350)  Since NVIDIA uses its DGX servers as a reference architecture to demonstrate and 
promote GPUs for use in third party datacentre servers, post-Transaction, NVIDIA 
will keep relying on OEMs/ODMs as its primary sales channel for GPUs. Moreover, 
these OEM/ODM customers are also rival datacentre suppliers such that 
antagonising them would harm NVIDIA’s GPU business more than it would help its 
DGX business.  
                                                 
333  Form CO, paragraphs 415 -416.  
334  Form CO, paragr aphs 419 -421. 
335  Form CO, paragraphs 422 -430. See also Form CO, Annex 6.5 – 10, […]. 
336  Form CO, paragraphs 431 -435. 
 
 
73 (351)  The Notifying Party also claims that the vast majority of Mellanox’s network 
interconnects today are used in third party datacentre servers, customers can easily 
switch to alternative network interconnects, and NVIDIA is a very small player in 
the downstream market for datacentre servers. In any event, the Merged Entity  
would have sufficient sales force to grow significantly its datace ntre server 
business.337 
As regards effects  
(352)  According to the Notifying Party, any potential input foreclosure strategy would 
have no effects on competition, as the Merged Entity  would be unable to raise the 
costs of competing datacentre server suppliers. Fir st, network interconnects represent 
a very small portion of the cost of datacentre servers. Moreover, in case of a price 
increase, the small percentage of datacentre server suppliers using Mellanox’s 
network interconnects could easily switch to alternative  solutions. The gains from 
DGX servers would be too small to make the strategy profitable.  
(353)  The Notifying Party also considers that, post -Transaction, the entry barriers on the 
plausible network interconnect markets will remain low.338 
5.3.3.3. Commission’s assessmen t 
(354)  For the reasons set out below, the Commission considers that the Merged Entity  will 
not have the ability or the incentive to engage in a n input foreclosure strategy post -
Transaction. Moreover, any such strategy would likely not have any material effect 
on competition.  
As regards ability  
(355)  The Commission considers that the Merged Entity  will likely not have the ability to 
engage in input forec losure.  
(356)  According to paragraphs 34 and 35 of the Non -Horizontal Merger Guidelines, for 
input foreclosure to raise competition concerns (i) the Merged Entity  must have a 
significant degree of market power in the upstream market and (ii) it must concern 
an important input for the downstream product.  
(357)  As regards the Merged Entity ’s market power upstream . As explained in Section 
5.2.3.3 , on balance, the Commission considers that Mellanox most likely does not 
have a sufficient degree of market power in the market  for Ethernet NICs of at least 
25 GB/s  to leverage its position in order to influence the choice of the GPU supplier . 
This is so in particular because there are sufficient credible alternatives to 
Mellanox’s NICs of at least 25 Gb/s (such as Broadcom, Inte l, Marvell and Chelsio), 
and competitors will continue to develop new products that will compete more 
strongly with Mellanox’s products.  
(358)  The Commission considers that, for the same reasons, Mellanox does not have a 
sufficient degree of market power in the  market for Ethernet NICs of at least 25 
GB/s  to have a significant influence on the conditions of competition in the upstream 
                                                 
337  Form CO, paragraphs 437 -451.  
338  Form CO, paragraphs 452 -457. 
 
 
74 market and thus, possibly, on prices and supply conditions in the downstream 
market.339 In line with this finding, a few respondent s to the market investigation 
listed alternative suppliers to Mellanox regarding Ethernet NICs of at least 25 Gb/s 
for their datacentre servers, including, inter alia , Broadcom, Marvell and Intel.340 
(359)  In contrast, in Section 5.2.3.3, the Commission has establ ished  that Mellanox most 
likely has a sufficient degree of market power on a high performance fabric market  
to leverage its position with its InfiniBand fabric in order to influence the choice of 
the GPU supplier . Similarly, the Commission considers that Mellanox would likely 
have a sufficient degree of market power on a high performance fabric market  to 
have a significant influence on the conditions of competition in the upstream market 
and thus, possibly, on prices and supply conditions in the downstream  market.341 
This is confirmed by the results of the market investigation. As explained by a large 
OEM, “ InfiniBand is the #1 must have commercially available fabric on the 
market. ”342 Further, end customers noted that “ for performance and scalability 
reasons w e need to deploy high speed and low latency interconnects (for both HPC 
and AI) ” and that “[c] urrently there is no real vendor independent alternative with 
respect to performance ”.343 
(360)  Therefore, the Commission considers  that the Merged Entity  would at most b e able 
to foreclose competing datacentre server suppliers in relation to Mellanox’s 
InfiniBand, but not in relation to its Ethernet NICs of at least 25 Gb/s.  
(361)  As regards whether Mellanox’s high performance fabric and Ethernet NICs of 
at least 25 Gb/s consti tute important input s for the downstream market for 
datacentre servers . The Commission investigated how important access to 
Mellanox’s InfiniBand and Ethernet NICs of at least 25 Gb/s is for OEMs and end 
customers when deciding whether  to supply/purchase d atacentre servers designed for 
applications/end uses for which DGX servers are used.344 The majority of 
respondents to the market investigation that expressed a view indicated  that such 
access was “ essential ” or “ important ” in their decision to supply/purcha se datacentre 
servers.345 
(362)  However, the Commission takes the view that it cannot be concluded from  the 
results of the market investigation that Mellanox’s InfiniBand and Ethernet NICs of 
at least 25 Gb/s are important inputs for the overall downstream  market for 
datacentre servers.  
(363)  First, when respondents have indicated that access to Mellanox’s network 
interconnects are important, this was in most cases limited to InfiniBand. For 
example, a large OEM explained that “ InfiniBand is the #1 must have commercially  
available fabric on the market.  With regards to NICs, access to Mellanox’s NICs 
may be essential in some use cases but not all. ”346 The same OEM noted that, while 
                                                 
339  Non-Horizontal Merger Guidelines, paragraph 35.  
340  Replies to Questionn aire Q2 to OEMs , question 63.2. ; Questionnaire Q3 to End Customers, question 54.2.  
341  Non-Horizontal Merger Guidelines, paragraph 35.  
342  Replies to Questionnaire Q2 to OEMs , question 63.1.  
343  Replies to Questionnaire Q3 to End Customers, question 54.1.  
344  Replies to Questionnaire Q2 to OEMs, question 63; Questionnaire Q3 to End Customers, question 54.  
345  Replies to Questionnaire Q2 to OEMs , question 63; Questionnaire Q3 to End Customers, question 54.  
346  Replies to Questionnaire Q2 to OEMs , question 63.1.  
 
 
75 “[f]or InfiniBand, there are generally no competitive alternatives commercially 
available ”, alternatives for NICs include “ Broadcom, Marvell, and Intel ”.347 
(364)  This is in line with the Commission’s findings that while the Merged Entity likely 
has market power on the market for high performance fabric, it likely does not have 
market power on the market for Ethernet NICS of at least 25 Gb/s. 
(365)  Second, the results of the market investigation concern DGX servers and datacentre 
servers that display the same level of performance and/or are suitable for the same 
workloads as DGX servers.  The importance of InfiniBand for DGX servers is 
illustrated by the fact that InfiniBand – which equips all DGX servers348 – appears to 
represent a significant source of product differentiation for the downstream market 
for datacentre servers.349 For example, when launching DGX-2, the vice-president 
and general manager of Deep Learning Systems at NVIDIA explained that 
“Mellanox InfiniBand and Ethernet solutions enable us to give maximum flexibility 
and performance to customers who build out large-scale clusters of DGX-2 
systems ”.350 Similarly, the vice president and general manager of Accelerated 
Computing at NVIDIA stated that “[t] ogether, we offer solutions that ensure the 
most demanding AI applications in the data center benefit from cutting-edge 
performance and scaling efficiency .”351 
(366)  Similarly, in a document describing IBM’s Spectrum Storage for AI, which 
integrates NVIDIA DGX Systems, IBM highlights the advantages of InfiniBand as 
part of DGX servers: “[f] or this reference architecture, the IBM Spectrum Scale on 
NVMe storage is attached to the DGX-1 or DGX -2 systems by a Mellanox EDR 
InfiniBand network to provide the most efficient scalability of the GPU workloads 
and datasets beyond a single DGX system while providing the inter-node 
communications between DGX systems .”352 
(367)  These considerations appear to suggest that InfiniBand may be considered as an 
important input for DGX servers. However, in paragraph 119 , the Commission 
established that the market for datacentre servers should not be segmented according 
to the applications/end uses for which the datacentre servers are designed or used. 
Therefore, it is not sufficient that InfiniBand would be an important input for part of 
the market, but not for the majority of the datacentre server market. 
(368)  Third, most competing suppliers (including Dell and HPE) offer datacentre servers 
that do not rely on InfiniBand. This is illustrated by the fact that,  according to the 
June 2019 Top500 list, the vast majority of supercomputers (the most powerful 
computer systems in the world) do not rely on InfiniBand as their network 
interconnect.353 As explained in Section 4.3.2.3, high performance fabrics (including 
InfiniBand) are designed in such a way as to achieve the highest performance 
possible in very large systems combining several hundreds or thousands of nodes. 
                                                 
347  Replies to Questionnaire Q2 to OEMs, question 63.2. 
348  Form CO, paragraph 412. 
349  Non-Horizontal Merger Guidelines, paragraph 34.  
350  https://www mellanox.com/page/press release item?id=2040 . 
351  https://apnews.com/d83fcac978944bb7920d35e19f51ec3b . 
352  https://www.ibm.com/downloads/cas/MNEQGQVP . 
353  Based on the June 2019 Top500 list, 377 out of the top 500 supercomputers in the world do not rely on 
InfiniBand, see https://www.top500.org/lists/2019/06/ .  
 
 
76 Therefore, if the majority of supercomputers do not need InfiniBand, it is likely that 
most datacentre servers in the world do not need InfiniBand either.  
(369)  In addition, Cray would continue to offer datacentre servers including its own high 
performan ce fabric, without the need to rely on Mellanox’s InfiniBand. As explained 
in paragraph 187, the Commission considers that Cray Slingshot, at least from a 
technical point of view, is emerging as a credible alternative to Mellanox’s 
InfiniBand in the short term.  The recent Frontier and Aurora exascale 
supercomputers (which Intel and AMD discrete datacentre GPUs have won)354 
support the fact that b oth Intel and AMD could in principle team up with Cray to 
compete with a bundle NVIDIA GPU – Mellanox InfiniBand fa bric for a given 
opportunity. This suggests that access to Mellanox’s InfiniBand fabric is not 
essential for Intel and AMD to win discrete datacentre GPU opportunities even for 
the most demanding HPC/AI applications.  
(370)  Based on  the elements gathered during its investigation, the Commission  takes the 
view that InfiniBand  is likely not a critical component without which datacentre 
servers could not be effectively sold on  the downstream market , within the meaning 
of paragraph 34 of the Non -Horizontal Merger Guidelines . 
(371)  As regards the Merged Entity’s ability to foreclose rival datacentre server 
suppliers. The Commission considers that the Merged Entity would not have such 
ability. This is because  the vast majority of datacentre servers are not equipped with 
Mellanox’s network interconnects. The Parties estimate that only about [10-20]% of 
all datacentre servers use Mellanox’s network interconnects.355 As a result, 
irrespective of a potential input f oreclosure strategy, there would remain sufficient 
alternative network interconnect suppliers for the downstream market  for datacentre 
servers (and its possible sub -segments) . 
(372)  In light of the above, the Commission concludes that the Merged Entity  will likely 
not have the ability to foreclose competitors on the market for datacentre servers 
(and its possible sub -segments) by restricting access to potentially critical inputs.  
 As regards incentives  
(373)  The Commission considers that the Merged Entity  will lack  the incentive to engage 
in input foreclosure because it would not be profitable to do so.  
(374)  The Merged Entity would face a trade -off between the potential loss of profit in the 
upstream market due to a reduction of input sales to downstream competitors and the 
potential profit gain from expanding sales downstream or raising prices to 
consumers.356 
(375)  First, while  the Merged Entity  may gain additional profits on the downstream market 
due to additional sales of its DGX servers  resulting from an input foreclosure 
strategy , the Commission considers that these profits are likely to be small  for the 
following reasons . 
                                                 
354  In addition, Cray announced a third exasc ale supercomputer win, El Capitan, expected to come online in 
2023, see https://www.cray.com/blog/cray -announces -third -exascale -supercomputer -win/. 
355  Form CO, parag raph 423 and Annex 6.5 – 10, […]. 
356  Non-Horizontal Merger Guidelines, paragraph 40.  
 
 
77 (376)  According to paragraph 42 of the Non -Horizontal Merger Guidelines, the incentive 
for the Merged Entity  to engage in input foreclosure depends on the exten t to which 
downstream demand is likely to be diverted away from foreclosed rivals and the 
share of that diverted demand that the downstream division of the Merged Entity  can 
capture.  
(377)  Currently, NVIDIA’s sales of DGX servers are small. In 2018, NVIDIA shipp ed 
approximately […] DGX servers, amounting to EUR […],357 compared to a total 
market size of EUR 65 739 million in the worldwide market for datacentre servers358 
and EUR […] for a plausible narrower worldwide market for mid -range servers.359 
(378)  The Commission cons iders that the Merged Entity ’s sales of DGX servers will most 
likely remain limited post -Transaction. Indeed, according to the Notifying Party, the 
DGX server is a “reference architecture” platform for NVIDIA to continue to 
innovate and demonstrate GPU inn ovations to server OEMs/ODMs, thereby 
generating demand for its GPUs. NVIDIA provides that innovation and the building 
blocks of its DGX servers to OEMs, ODMs and CSPs to use in their own server 
offerings.360 As explained by the Notifying Party, “ NVIDIA’s DG X products are first 
and foremost reference design architecture platforms, and do not have a substantial 
footprint in the server market .”361 A number of NVIDIA internal documents support 
this strategy.362 In particular, an NIVDIA presentation to its Board of D irectors of 
[BUSINESS SECRETS  – Information redacted regarding business plans] .363  
(379)  Furthermore, the Notifying Party confirmed that the “ Transaction will change 
nothing about NVIDIA’s incentive to employ that business model ”364 and that the 
Merged Entity  “does not have a plan to take market share from NVIDIA’s 
OEM/ODM server customers following the Mellanox acquisition ”.365 In fact, the 
Merged Entity  “plans to grow the entire server market by creating improved GPUs, 
interconnects, and server architectures that it  will share with its OEM/ODM 
customers ”.366 Moreover, the Commission has not found any evidence in NVIDIA’s 
internal documents of a potential change of strategy post -Transaction.  
(380)  A large OEM confirmed that competition with NVIDIA’s DGX servers “ remains 
rathe r limited since, so far, Nvidia has only sold a small number of individual DGX 
servers ” and that it “ does not believe that increasing the sales of Nvidia’s DGX 
servers is a key rationale for acquiring Mellanox. This is because the value of 
servers is relat ively low versus the value of the components sold by Nvidia (e.g., 
accelerators). Nvidia’s motivation for selling cheap servers with their own 
                                                 
357  Form CO, paragraph 180. According to the Notifying Party, this figures covers both direct sales to end -
customers and sales to OEMs for integration into their own server s. The Notifying Party notes that in FY 
2019, almost […] of DGX sales were made to end -customers and distributors.  
358  Form CO, Table 6.  
359  Form CO, Tale 21.  
360  Form CO, paragraphs 32 and 179; see also Notifying Party’s response to RFI 5 , question 7.  
361  Form CO, paragraph 729.  
362  For example, see NVIDIA’s internal document, [BUSINESS SECRETS  – Information red acted regarding 
business plans].  
363  NVIDIA’s internal document, […], slide 6 (Annex RFI 2 – 12). 
364  Form CO, paragraph 438.  
365  Form CO, paragraph 448  
366  Form CO, paragraph 448.  
 
 
78 accelerators included therefore mainly relies in the opportunity to increase its sales 
of accelerators .”367 
(381)  Therefo re, it is likely that only a small portion of the demand for datacentre servers 
may potentially be diverted away from rivals. This significantly limits the Merged 
Entity ’s incentive to engage in input foreclosure.  
(382)  Second , the Commission believes that any potential los s of sales on the network 
interconnect side may be compensated by the additional (although small ) sales on 
the DGX server side. While profit margins for network interconnects are relatively 
high,368 these products only represent a small proporti on of the total price of 
datacentre servers. Therefore, even if the Merged Entity increase d its sales of 
network interconnects as a result of an input foreclosure strategy, the profits 
resulting from these additional sales would likely  be smaller than the profits 
resulting from additional sales of datacentre severs.  
(383)  In any event, when analysing to what extent foreclosure would be profitable, the 
Merged Entity would in addition need to take into account potential  
counterstrateg ies implemented by customers/OE M. This is particularly relevant as 
regards  the GPU side of the market , where OEMs/ODMs are not only competitors of 
NVIDIA in the datacentre server market (and, as such, the potential victims of an 
input foreclosure strategy)  but also key customers for NVI DIA’s GPUs (and 
Mellanox’s network interconnects).369 
(384)  OEMs/ODMs are the main channel to market for NVIDIA’s GPUs.370 According to 
the Notifying Party, in 2018 , […] of NVIDIA’s GPU sales were made to 
OEMs/ODMs.371 These include, inter alia , […]. The Notifying Par ty confirmed that 
[BUSINESS SECRETS  – Information redacted regarding business strategy] .372 The 
Commission has not found any NVIDIA internal document suggesting that this 
distribution strategy would change post -Transaction.  
(385)  A restriction of access to Mellano x’s InfiniBand by the Merged Entity  would mean a 
loss of flexibility for OEMs/ODMs since it would become uneconomical to equip 
third party datacentre servers with InfiniBand or, at least, such datacentre servers 
might not be as performant as required by cu stomers. Consequently, and since they 
are major customers for NVIDIA’s GPUs, these OEMs/ODMs would likely retaliate 
by shifting (or threating to shift) a significant share of their GPU purchases away 
from NVIDIA to AMD or Intel. This would most likely resu lt in a substantial loss of 
sales of GPUs for the Merged Entity .373 
(386)  The reduction of profits on the GPU side would exceed any potential increase in 
profits resulting from an input foreclosure strategy. This is so because GPUs are a 
                                                 
367  See agreed minutes of a conference call of 29 July 2019 with a large OEM, paragraphs 6 and 8.  
368  According to the data provided by the Notifying Party, in 2018, Mellanox’s gross profit margins were of 
[…] on InfiniBand (includin g adapters and switches) and […] on Ethernet NICs of at least 25 Gb/s. See 
Notifying Party’s response to RFI 5, question 1 , Table 2. 
369  Form CO, paragraph 440.  
370  Form CO, paragraph 544 . 
371  Form CO, paragraph 582 . 
372  Form CO, paragraph 450.  
373  Form CO, par agraphs 431 -432 and 440.  
 
 
79 much more valuable compone nt than other parts of datacentre servers (including 
network interconnects). According to data provided by the Notifying Party, in fiscal 
year 2019, NVIDIA’s gross profit margin resulting from the sale of GPUs as part of 
its DGX 1V servers amounted to USD […], corresponding to an […] gross profit 
margin on GPUs, and representing approximately […] of the total gross profit 
generated by the sales of DGX 1V. Similarly, NVIDIA’s gross profit margin 
resulting from the sale of GPUs as part of its DGX -2 servers am ounted to USD […], 
corresponding to an […] gross profit margin on GPUs, and representing 
approximately […] of the total gross profit generated by th e sales of DGX -2. The 
remaining  […] and […] of the total gross profit for DGX 1V and DGX -2, 
respectively, correspond to the gross profit generated by the sale of all the other 
components of the DGX servers, including the network interconnects.374 
(387)  Finally, the majority of the respondents to the market investigation who expressed an 
opinion consider that the Merge d Entity  would not have an incentive to restrict 
access to Mellanox’s interconnects to server OEMs in order to boost its sales of 
DGX servers.375 For example, a large OEM explained that “[i] t’s doubtful. It is 
probably more profitable for Nvidia to sell Mell anox freely than to try to restrict 
sales to benefit the narrow set of use cases where its DGX product competes. ”376 
Similarly, end customers indicated that “ I doubt it would, the DGX is just a fraction 
of NVIDIA’s HPC sales ”, “Should they do, the market wou ld be very unhappy and it 
would be a non sense ” and “ I really don’t expect that otherwise it’s a major mistake 
from NVIDIA ”.377 
(388)  In light of the findings of this section and of the outcome of the market investigation, 
the Commission concludes that the Merged Entity  would not have the incentive to 
engage into input foreclosure.  
As regards effects  
(389)  The Commission consider s that a potential input foreclosure strategy for network 
interconnects would likely have no material effect on competition. This is so because 
any potential input foreclosure strategy implemented by the Merged Entity  would 
not result in higher prices for consumers and/or higher barriers to entry for potential 
competitors in the downstream market for datacentre servers.378 
(390)  First, given the fact that , according to the Notifying Party, only approximately [10-
20]% of all datacentre servers use Mellanox’s network interconnects,379 only a 
limited proportion of rival datacentre server suppliers could potentially be 
foreclosed. This makes it less likely that the Transaction could be expected to result 
in a significant price increase – and therefore to significantly impede competition – 
in the downstream market.380 
                                                 
374  Notifying Party’s response to RFI 5 , question 10 and Table 5.  
375  Replies to Questionnaire Q2 to OEMs , question 64 ; Questionnaire Q3 to End C ustomers , question 55.  
376  Replies to Questionnaire Q2 to OEMs , question 64.1.  
377  Replies to Questionnaire Q3 to End C ustomers , question 55.1.  
378  Non-Horizontal Merger Guidelines, paragraphs 47 -49. 
379  Form CO, paragraph 423.  
380  Non-Horizontal Merger Guidelines, paragraph 48.  
 
 
80 (391)  Second, there will remain sufficient credible alternative datacentre server suppliers 
in the downst ream markets that will not be affected by a potential input foreclosure 
strategy including those suppliers that do not rely on Mellanox’s InfiniBand as well 
as those that are vertically integrated such as Cray.381 Furthermore, the Notifying 
Party explains th at there are no barriers for customers to switch between different 
datacentre server suppliers. In fact, customers often “mix and match” different 
servers within their datacentre.382 
(392)  In light of the above, the Commission considers that a decision post-Transaction to 
restrict access to Mellanox’s InfiniBand would have no material impact on rival 
datacentre server suppliers.  
Conclusion  
(393)  In light of the above considerations and in view of the outcome of the market 
investigation, the Commission consider s that the Transaction does not raise serious 
doubts as to its compatibility with the internal market or the functioning of the EEA 
Agreement with respect to potential input foreclosure.  
5.3.4.  Customer foreclosure  
5.3.4.1. Potential concern  
(394)  All NVIDIA DGX servers are equ ipped with network interconnects. Therefore, as 
post-Transaction the Merged Entity  will be vertically integrated, it could decide to 
source internally the entire quantity of network interconnects it needs for its DGX 
servers, thereby potentially foreclosin g Mellanox’s rivals on the upstream plausible 
network interconnect markets.  
5.3.4.2. The Notifying Party’s views  
As regards ability  
(395)  The Notifying Party submits that the Merged Entity  will lack the ability to engage 
into vertical customer foreclosure. First, NVIDIA is a small customer of network 
interconnects on the downstream market for datacentre servers.  
(396)  Second, NVIDIA does not currently purchase high -performance network 
interconnects from third parties such that there is no substantial opportunity for 
diversion o f purchases from rivals to Mellanox.  
(397)  Third, according to the Notifying Party, competing network interconnect suppliers 
will continue to have access to a number of large, alternative datacentre server 
OEMs/ODMs.383  
As regards incentives  
                                                 
381  Non-Horizontal Merger Guidelines, paragraph 50.  
382  Form CO,  paragraph 741.  
383  Form CO, paragraphs 460 -462. 
 
 
81 (398)  According to the Not ifying Party, given NVIDIA’s negligible presence in the 
datacentre server market, the Merged Entity  would have an extremely limited sales 
base on which to enjoy any price increase downstream.  
As regards effects  
(399)  The Notifying Party submits that any potentia l customer foreclosure strategy would 
not have any negative effects on competition in the plausible upstream network 
interconnect markets notably because NVIDIA has a limited market share in the 
downstream datacentre server market and NVIDIA currently purc hases very few 
network interconnect products from third parties for its DGX servers.384 
5.3.4.3. Commission’s assessment  
(400)  For the reasons set out below, the Commission considers that the Merged Entity  
would not have the ability and/or incentive to engage in a customer foreclosure 
strategy post -Transaction.  
As regards ability  
(401)  The Commission considers that NVIDIA’s DGX servers do not represent a 
significant channel to market for suppliers of network inte rconnect solutions.  
(402)  First, for customer foreclosure to be a concern, the Transaction must involve a 
company that is an important customer with a significant degree of market power in 
the downstream market.385 In 2018, NVIDIA’s market share in the overall mar ket for 
datacentre servers was [0-5]% worldwide.386 Even considering a plausible narrower 
market for mid -range servers, NVIDIA’s market share remains [10-20]% 
worldwide.387 The Commission therefore considers that NVIDIA does not – and 
post-Transaction, the Merged E ntity will not – constitute an important customer with 
a significant degree of market power in the downstream market for datacentre server.  
(403)  Second, according to paragraph 61 of the Non -Horizontal Merger Guidelines, if 
there is a sufficiently large cus tomer base, at present or in the future, that is likely to 
turn to independent suppliers, the Commission is unlikely to raise competition 
concerns. The evidence shows that there are indeed sufficient economic alternatives 
in the downstream market for upstr eam rivals to sell their network interconnects.388 
Tables 4 and 5 show that t hese alternatives are large datacentre server suppliers with 
market shares that are much higher than NVIDIA’s, including Dell EMC ( [20-
30]% ), HPE ( ([10-20]% ), Inspur ( [5-10]%), IBM ([5-10]%), Lenovo ( [5-10]%), 
                                                 
384  Form CO, paragraph 468.  
385  Non-Horizontal Merger Guidelines, paragraph 61.  
386  NVIDIA’s market share on the datacentre server market was [0-5]% by volume and [0-5]% by value, in 
2018. Source: Gartner and NV IDIA’s sales data. See Form CO, Table 6 and paragraph 460. The Notifying 
Party notes that these market share estimates do not include the shares of companies that develop and 
monetise servers but do not sell them on the merchant market, such that NVIDIA’s actual market shares.  
387  NVIDIA’s market share on a plausible mid -range datacentre server market was [10-20]% by value in 
2018. Source: Gartner and NVIDIA’s sales data. Source: Gartner and NVIDIA’s sales data. See Form CO, 
Table 21.  
388  Non-Horizontal Merg er Guidelines, paragraph 61.  
 
 
82 Huawei ( [5-10]%), etc.389 Even on the plausible mid -range datacentre server market, 
NVIDIA faces strong competitors such as IBM ( [30-40]%), HPE ( [20-30]%), Oracle 
([10-20]%) and Fujitsu ( [5-10]%).390 Therefore, should the Merged En tity decide to 
foreclose Mellanox’s competitors from NVIDIA, rival network interconnect 
suppliers will retain access to the vast majority of the downstream market for 
datacentre servers.  
(404)  Third, [BUSINESS SECRETS – Information redacted regarding business st rategy] . 
As a result, there are no existing sales of high -performance fabric to NVIDIA for 
rivals to lose. As regards Ethernet network interconnects, the Notifying Party 
explained that NVIDIA [BUSINESS SECRETS – Information redacted regarding 
business stra tegy] .391 The Commission therefore considers that there is no substantial 
opportunity for diversion of network interconnect purchases from rivals to Mellanox. 
Given that pre -merger, NVIDIA’s purchases from rival network interconnect 
suppliers represent a ver y small share of the available sales base for those firms, the 
potential loss of the Merged Entity  as a customer would not represent a significant 
loss for upstream rivals.392 
(405)  Finally, Mellanox does not have any exclusive contracts with independent 
downstrea m customers, which further limits the ability of the Merged Entity  to 
engage in any customer foreclosure strategy.393 
(406)  In light of these considerations, the Commission concludes that the Merged Entity  
will likely not have the ability to foreclose upstream competitors by sourcing  
internally all its requirements in high performance fabric and Ethernet NICs of at 
least 25 Gb/s for its DGX servers . 
As regards incentives  
(407)  The Commission consider s that the Merged Entity  would not have the incentive to 
engage in customer foreclosure because it would not be profitable to do so.  
(408)  In fact, t he Merged Entity would face a trade -off between the potential gains (in 
particular in terms of additional profits)  on the up stream market s for high 
performance fabric and Ethernet NICs of at least 25 Gb/s  from foreclosing upstream 
rivals (allowing the Merged Entity to raise price s in the upstream market) and the 
possible costs  associated with reduc ed purchases from rival upstre am suppliers.394  
(409)  First, the Commission considers that any potential gains made by the Merged Entity 
in the upstream markets for network interconnects would be limited. This is notably 
because Mellanox’s market power on the high performance fabric market alr eady 
enables it to extract significant profits from its InfiniBand sales. 
                                                 
389  These are market shares on the datacentre server market for 2018. Source: Gartner. See Form CO, Table 6 
and paragraph 463.  
390  These are market shares on the datacentre server market for 2018. Source: Gartner. See Form CO, Ta ble 
21. 
391  Form CO, paragraph 468.  
392  Non-Horizontal Merger Guidelines, paragraph 61 , footnote 1 . 
393  Non-Horizontal Merger Guidelines,  paragraph 61,  footnote 1.  
394  Non-Horizontal Merger Guidelines, paragraph 68.  
 
 
83 (410)  Second, any potential lo sses in the downstream market for datacentre servers (and its 
possible sub -segments) would likely be limited. [BUSINESS SECRETS – 
Information redacted regardi ng business strategy] . Therefore, the costs associated 
with reducing or stopping purchases from rival network interconnect suppliers would 
be minimal, if any.  
(411)  In light of these considerations, the Commission takes the view that it remains  
unclear whether t he Merged Entity would have an incentive to engage in input 
foreclosure.  
As regards effects  
(412)  The Commission consider s that a potential customer foreclosure strategy for network 
interconnects would likely have no material effect on competition.  First, the 
Commission considers that only a very limited fraction of upstream network 
interconnects would be affected by a potential revenue decrease resulting from a 
potential customer foreclosure strategy. This is so because of (i)  NVIDIA’s very 
limited position in the downstream market for datacentre servers (and its possible 
sub-segments)  and (ii) the fact that it currently [BUSINESS SECRETS – 
Information redacted regarding business strategy] .395 
(413)  Second, as explained above, rival suppliers are largely protected from  any 
foreclosure strategy because of the existence of multiple suppliers of datacentre 
servers to which network interconnects suppliers can offer their products.  
(414)  Therefore, a decision post -Transaction to only purchase network interconnects from 
Mellanox w ould have no material impact on rival network interconnect suppliers.  
Conclusion  
(415)  In light of the above considerations, the Commission considers that the Transaction 
does not raise serious doubts as to its compatibility with the internal market or the 
funct ioning of the EEA Agreement with respect to potential customer foreclosure.  
6. CONCLUSION  
(416)  For the above reasons, the European Commission has decided not to oppose the 
notified operation and to declare it compatible with the internal market and with the 
EEA  Agreement. This decision is adopted in application of Article 6(1)(b) of the 
Merger Regulation and Article 57 of the EEA Agreement.  
For the Commission  
 
 
(Signed)  
Margrethe VESTAGER  
Executive Vice -President  
                                                 
395  Non-Horizontal Merger Guidelines, paragra ph 74.