CELEX: 32014M7202
Language: en
Date: 2014-06-26 00:00:00
Title: Commission Decision of 26/06/2014 declaring a concentration to be compatible with the common market (Case No COMP/M.7202 - LENOVO / MOTOROLA MOBILITY) according to Council Regulation (EC) No 139/2004 (Only the English text is authentic)

|[pic]                             |EUROPEAN COMMISSION                                                                                      |

                                        Brussels, 26.6.2014
                                        C(2014) 4459 final

                                        [pic]

|                                                                       |                                                                       |
|To the notifying party                                                 |                                                                       |

Subject:    Case M.7202 - Lenovo/ Motorola Mobility
         Commission decision pursuant to Article 6(1)(b) of Council Regulation No 139/2004[1]

                                                                TABLE OF CONTENTS

1.    THE PARTIES      3

2.    THE OPERATION    3

3.    EU DIMENSION     3

4.    PRODUCT AND GEOGRAPHIC MARKET DEFINITIONS    4

    4.1.    Relevant product market     4
        4.1.1    Smart mobile devices  4
               4.1.1.1 View of the Notifying Party 4
               4.1.1.2 Previous Commission decisions, results of the market investigation and Commission's assessment  5
        4.1.2    Patents reading on smart mobile devices      6
               4.1.2.1 View of the Notifying Party 6
               4.1.2.2 Previous Commission decisions, results of the market investigation and Commission's assessment  6
    4.2.    Relevant geographic market  7
        4.2.1    Smart mobile devices  7
        4.2.2    Patents reading on smart mobile devices      7

5.    COMPETITIVE ASSESSMENT 8

    5.1.    Horizontal assessment 8
    5.2.    Vertical assessment   9
        5.2.1    View of the Notifying Party 9
               5.2.2   Results of the market investigation and Commission's assessment     9
    5.3.    Acquisition of a limited number of patents of Motorola Mobility by Lenovo      11
        5.3.1    View of the Notifying Party 11
        5.3.2    Results of the market investigation and Commission's assessment    11
    5.4.    Licensing of Motorola Mobility's patent portofolio 12

6.    CONCLUSION 13

    1) On 19 May 2014, the European Commission received notification of  a  proposed  concentration  pursuant  to  Article  4  of  the  Merger
       Regulation by which Lenovo Group Limited (‘Lenovo’, China) acquires within the meaning of Article  3(1)(b)  of  the  Merger  Regulation
       control of the whole of Motorola Mobility Holdings LLC (‘Motorola Mobility’,  USA)  by  way  of  purchase  of  shares[2].  Lenovo  will
       hereinafter also be referred to hereinafter as the "Notifying Party"; Lenovo and Motorola Mobility together will  hereinafter  also  be
       referred to as the "Parties" to the proposed transaction.

THE PARTIES

    2) Lenovo is a multinational computer technology group that develops, manufactures  and  markets  desktop  and  notebook  PCs,  workstations,
       servers, storage drives, and IT management software. It also manufactures smart  mobile  devices,  and  offers  IT  services.  Founded  in
       Beijing, Lenovo operates its business from three principal operations worldwide (Morrisville, North Carolina,  USA;  Beijing,  China;  and
       Singapore).

    3) Motorola Mobility is a supplier of smart mobile devices. Motorola Mobility is currently solely controlled by Google  Inc.  (“Google”).  As
       part of the proposed transaction, Lenovo will acquire Motorola Mobility's smart mobile devices business, approximately [2000-3000]  design
       patents and a limited number of patents ([100-200] utility patents and [<100] patent applications) relating to infrastructure network  and
       mobile handsets. Google retains the vast majority of Motorola Mobility's patent portfolio and will grant Lenovo broad patent  licenses  in
       relation to all the retained patents.

   THE OPERATION

    4) Pursuant to an Acquisition Agreement dated 29 January 2014, Lenovo has agreed to acquire from  Google  100%  of  the  shares  of  Motorola
       Mobility. As a result, Lenovo will acquire sole control over Motorola Mobility.

    5) Therefore, the proposed transaction constitutes a concentration within the meaning of Article 3(1)(b) of the Merger Regulation.

    6) The Notifying Party submits that through its acquisition of Motorola Mobility, it seeks to become a more effective competitor of  Samsung,
       Apple and other suppliers of smart mobile devices worldwide. Lenovo also seeks to  generate  cost  savings  through  increased  scale  and
       combining aspects of the Motorola Mobility and Lenovo smart mobile devices businesses.

   EU DIMENSION

    7) The proposed concentration does not have a Union Dimension within the meaning of Article 1 (2) and (3) of the Merger  Regulation,  but  it
       fulfils the conditions set out in Article 4(5) of the Merger Regulation. On 17 March 2014, the Notifying Party submitted, by  means  of  a
       reasoned submission, a referral request pursuant to Article 4(5) of the Merger Regulation with respect to the proposed concentration.

    8) As none of the Member States competent to review the proposed concentration expressed its disagreement as regards the request to refer the
       case, the notified concentration is deemed to have a Union dimension pursuant to Article 4(5) of the Merger Regulation.

   PRODUCT AND GEOGRAPHIC MARKET DEFINITIONS

    9) Both Parties supply smart mobile devices worldwide. In the EEA, Lenovo sells tablets, but does not  sell  smartphones.  Motorola  Mobility
       supplies smartphones in the EEA. While it has sold a small number of tablets outside the EEA in 2013,  it  has  now  ceased  manufacturing
       tablets. Both Parties use the Android operating system for their smart mobile devices.

   10) In April 2014, Lenovo acquired around 110 patents from Unwired Planet Inc., which included 7 European patents and 14 US patents which have
       been declared standard essential to smart mobile devices. Through the  proposed  transaction,  Lenovo  also  acquires  [2000-3000]  design
       patents and a limited number of utility patents. With the exception of the aforementioned patents previously acquired from Unwired  Planet
       Inc., the Notifying Party submits that none of the patents held by Lenovo has been declared  standard  essential  with  respect  to  smart
       mobile devices, or is likely to be considered by third parties as "commercially essential" to smart mobile devices.

   11) The Commission notes that, according to its previous practice, each Standard Essential Patent ("SEP") gives rise to technically vertically-
       affected markets involving the SEP upstream and the supply of smart mobile devices downstream.[3]

        4.1.     Relevant product market

1 Smart mobile devices

1 View of the Notifying Party

   12) The Notifying Party submits that the relevant product market is the market for smart mobile devices.

   13) Lenovo submits that smart mobile devices are mobile devices with advanced Internet browsing, multimedia  and  app  capabilities[4].  Smart
       mobile devices are available in a variety of designs, and with a range of different  features  and  hardware  components.  There  are,  in
       particular, two types of smart mobile devices: smartphones and tablets.

   14) According to the Notifying Party, smartphones are wireless phones with  advanced  Internet  browsing  and  app  capabilities.  Smartphones
       incorporate hardware and software features that enable them to fulfil many of the functions traditionally associated with state of the art
       computing. There is no industry standard definition of a smartphone, but rather a spectrum of functionalities[5], and  handsets  therefore
       vary in terms of size, weight, durability, screen size, audio quality, camera size/zoom, web speed,  computer  processing  power,  memory,
       ease-of-use, optical quality, casing quality/design, and additional multimedia offerings.

   15) Tablets are consumer mobile devices between a smartphone and a laptop computer. Tablets are a relatively new and rapidly growing  product,
       accounting for around 10% of worldwide sales of smart mobile devices. Tablets are generally operated using a touch screen and run a mobile
       operating system, which may be proprietary (e.g., iOS on the Apple iPad) or non-proprietary (e.g. Android  on  the  Samsung  Galaxy  Tab).
       Tablets are based on very similar hardware to advanced touch-screen based smartphones, and similarly provide a rich multimedia  experience
       along with many of the functions of a personal computer.

   16) The Notifying Party submits that given that the proposed transaction does not raise competitive concerns  under  any  alternative  product
       market definition, the question whether smartphones and tablets belong to the same market may be left open. The  Notifying  Party  further
       submits that it is not necessary to distinguish between business and personal users, as most smart mobile devices  can  be  customised  to
       support advanced security features and businesses are increasingly permitting staff to use their own smart  mobile  devices  for  business
       purposes.

2   Previous Commission decisions, results of the market investigation and Commission's assessment

   17) In its recent decision Microsoft/Nokia[6] the Commission assessed the proposed transaction on the basis of the product market being “smart
       mobile devices” comprising smartphones and tablets, and excluding basic and feature phones.

   18) With regard to the question whether smartphones and tablets belong to separate product markets, the  market  investigation  in  that  case
       indicated that from the  supply-side  perspective,  smartphones  and  tablets  are  comparable  to  one  another  in  terms  of  technical
       characteristics (operating system, hardware requirements) and for certain functionalities (web browsing, email  access,  watching  videos,
       games, maps, etc.). On the other hand, the market investigation also revealed that  from  a  demand-side  perspective,  smartphones  offer
       certain functionalities that tablets typically do not offer (for example, the ability to make a telephone call),  while  tablets,  due  to
       their larger screen size, may be better suited than smartphones for other uses (for  example,  watching  long  videos,  reading  books  or
       newspapers and/or extensive work sessions). However, the Commission ultimately left open  the  question  whether  there  may  be  separate
       product markets for smartphones and tablets.

   19) In the present case, the exact definition of the product market can be  left  open,  as  the  proposed  transaction  does  not  raise  any
       competitive concern under any plausible market definition.

2 Patents reading on smart mobile devices

   20) Thousands of different patents may be needed for the functioning of a smart mobile device. Smart mobile devices  (operating  on  a  mobile
       software platform) must,  in  order  to  operate  effectively,  comply  with  various  standards  that  have  been  developed  for  mobile
       communications. In its previous decisional practice, the Commission has distinguished between standard essential patents ("SEPs") and non-
       standard essential patents ("non-SEPs")[7].

1 View of the Notifying Party

   21) The Notifying Party submits that SEPs held by Lenovo relating to smart mobile devices[8] do not each constitute a  separate  market  since
       the standards used in the mobile telecoms industry are rapidly evolving, multiple licensees already use this technology[9] and many  other
       SEPs are relevant to the UMTS 3G and 4G LTE standards[10].

   22) In relation to the non-SEPs acquired by Lenovo through the proposed transaction, the Notifying Party submits that design patents relate to
       the aesthetic design of a functional item, which can be easily worked around by competitors by simply adopting different design  features.
       Therefore, they do not usually operate as a barrier to entry or limit innovation.

2 Previous Commission decisions, results of the market investigation and Commission's assessment

   23) In its decision Google/Motorola[11], the Commission considered that Standard Essential Patents (SEPs) are patents which are, or have  been
       declared, essential to the implementation of a standard in a Standard Setting Organisation (SSO) and  which  cannot  be  designed  around.
       Therefore, each SEP constitutes a separate relevant technology market in its own.

   24) The European Telecommunication  Standard  Institute's  ("ETSI")  IPR  (Intellectual  Property  Right)  Policy  defines  SEPs  as  follows:
       '''ESSENTIAL' as applied to IPR means that it is not possible on technical (but  not  commercial)  grounds,  taking  into  account  normal
       technical practice and the state of the art generally available at the time of standardization, to make, sell,  lease,  otherwise  dispose
       of, repair, use or operate EQUIPMENT or METHODS which comply with a STANDARD without infringing that IPR. For the avoidance  of  doubt  in
       exceptional cases where a STANDARD can only be implemented by technical solutions, all of which are infringements of IPRs, all  such  IPRs
       shall be considered ESSENTIAL''.

   25) As regards non-SEPs (implementation/utility or design patents), the Commission considered that, although they may bring  additional  value
       to the mobile operating system (OS), they are not by definition technically  essential  for  access  to  a  standard  and  can  be  worked
       around[12].

   26) In the present case, the exact definition of the product market can be  left  open,  as  the  proposed  transaction  does  not  raise  any
       competitive concern under any plausible market definition.

        4.2.     Relevant geographic market

1 Smart mobile devices

   27) In accordance with previous Commission decisions[13], the Notifying Party submits that the relevant geographic  market  for  smart  mobile
       devices is at least EEA-wide, if not worldwide.

   28) The market investigation did not provide any indications that would  justify  a  change  in  the  Commission's  practice  as  regards  the
       geographic market definition.

   29) The Commission therefore considers that the geographic scope of the relevant market is at least EEA-wide, if not  worldwide.  However,  in
       this case the exact scope of the market can be left open, as the proposed transaction  does  not  raise  competition  concerns  under  any
       alternative geographic market definition considered.

2 Patents reading on smart mobile devices

   30) The Notifying Party notes the Commission has previously assessed the licensing of SEPs on at least EEA-wide basis[14].

   31) Similarly in this case, the Commission considers that the geographic scope of the relevant market is at least EEA-wide, if not  worldwide.
       However, this question can be left open as the proposed transaction does not raise competition concerns under either market definition.

   COMPETITIVE ASSESSMENT

   32) The proposed transaction results in minor horizontal overlap in the market(s) for smart mobile devices. As Lenovo holds a  limited  number
       of recently acquired standard essential patents relevant to the smart mobile devices business, the transaction will  lead  to  technically
       vertically affected markets involving each standard essential patent upstream and the supply of smart mobile devices downstream.

        5.1.     Horizontal assessment

   33) The Parties' activities overlap on a possible market comprising the development, manufacturing and sale of both smartphones  and  tablets.
       However, the proposed transaction would not give rise to any affected markets, as the Parties' combined share in 2013  remains  far  below
       20% at both EEA and worldwide level.

   34) Lenovo submits that it supplies smartphones and tablets worldwide. In the EEA, Lenovo only supplies tablets.  Motorola  Mobility  supplies
       smartphones worldwide (including in the EEA). Motorola Mobility ceased manufacturing tablets and in 2013 it only sold a  small  number  of
       tablets outside the EEA. The Parties have a rather complementary geographic focus,  as  Lenovo  focuses  on  China  and  Asia/Pacific  and
       Motorola Mobility on the Americas.

   35) However, irrespective of both product and geographic market definition, the Parties' combined market share would never be greater than [5-
       10]% in value or [5-10]% in volume[15]. Indeed, if a separate market for smartphones were to be considered, the Parties'  combined  market
       share would below [0-5]% both in volume and in value in the EEA, and to [5-10]% in volume and [0-5]% in value world-wide.

   36) Similarly, if a separate market for tablets were to be considered, the Parties' combined market share would amount to  [5-10]%  in  volume
       and [0-5]% in value in the EEA, and to [0-5]% in volume and [0-5]% in value world-wide.

   37) Furthermore, the Commission notes that strong suppliers exist in this market, such as Samsung,  Apple,  Huawei,  LG,  Yulong,  Sony,  ZTE,
       Microsoft/Nokia, Blackberry or HTC.

   38) Respondents to the market investigation have not expressed any  concerns  as  regards  a  possible  significant  impediment  to  effective
       competition arising from horizontal overlaps between the activities of the Parties.

   39) In light of the above, the Commission concludes that the proposed transaction does not raise serious doubts as to its  compatibility  with
       the internal market as a result of horizontal overlaps between the activities of the Parties.

        5.2.     Vertical assessment

1 View of the Notifying Party

   40) Lenovo submits that it will not have either the ability or the incentive to foreclose competing  suppliers  of  smart  mobile  devices  by
       restricting willing licensees' access to the patents recently acquired from Unwired Planet and which have been declared essential  to  the
       UMTS 3G standard and LTE release 8 standard.

   41) With regard to ability, Lenovo submits that it will continue to be constrained by the FRAND commitments that Unwired Planet has given  for
       these patents, which will substantially reduce its ability to engage in input foreclosure by threatening injunctive relief against willing
       potential licensees. The Notifying Party also submits that its ability to foreclose competing smart mobile device manufacturers is further
       impeded by the fact that the SEPs acquired from Unwired Planet  have  already  been  widely  licensed[16]  to  a  large  number  of  other
       companies[17] which count for a significant proportion of competing suppliers of smart mobile devices. Lenovo will thus be  bound  by  the
       terms of these licenses and covenants.

   42) Lenovo further claims that given that its share on the  downstream  market  for  smart  mobile  devices  would  be  enlarged  through  the
       acquisition of Motorola Mobility by only [0-5]% and [0-5]% of the total supply in the EEA and worldwide respectively, the transaction will
       have no impact on its abilities or incentives as regards the exercise of its SEPs. Second, Lenovo would  have  no  incentive  to  seek  to
       impose non-FRAND terms or use the threat of injunctions in respect of the SEPs in a manner that may  be  contrary  to  Article  102  TFEU.
       Third, Lenovo submits that it would have no incentive to engage in input foreclosure of SEPs relevant to smart mobile devices  because  of
       the threat of counter-suits against it, either in the smart mobile device sector or in other areas of its business where  competing  smart
       mobile device manufacturers may also hold relevant patents. Fourth, Lenovo submits that its intention is to use the patents  that  it  has
       acquired from Unwired Planet, including the SEPs, to protect its commercial position and facilitate  negotiation  of  cross-licences  with
       other patent holders, thereby enabling it to compete and innovate free from the costs and uncertainties of litigation.

   5.2.2   Results of the market investigation and Commission's assessment

   43) First, the Commission notes that the FRAND commitments which Unwired Planet has given for the SEPs acquired by  Lenovo  will  continue  to
       apply and constrain Lenovo in the exercise of these patents. These commitments have been transferred with the patents and are also binding
       on Lenovo as acquirer.[18] As set out in the Horizontal Guidelines: "FRAND commitments are designed to ensure that essential IPR protected
       technology incorporated in a standard is accessible to the users of that standard on fair, reasonable  and  non-discriminatory  terms  and
       conditions. In particular, FRAND commitments can prevent IPR holders from making the implementation of a standard difficult by refusing to
       license or by requesting unfair or unreasonable fees (in other words excessive fees) after the industry has been locked-in to the standard
       or by charging discriminatory royalty fees".[19]

   44) Lenovo has thus to abide by its FRAND commitments in relation to  the  licensing  of  these  SEPs  to  third  parties.  FRAND  commitments
       essentially oblige SEP holders: (i) to make the patent in question available to all interested third parties;  (ii)  not  to  discriminate
       between different licensees; and (iii) to offer a licence to the patent on fair and reasonable terms. SEP holders do,  however,  have  the
       right to conduct undistorted negotiations with interested parties concerning the exact terms and conditions of the licence, including  the
       exact level of royalties and the right to enforce agreements on such terms by means of litigation.

   45) Second, in its recent antitrust decision Motorola Mobility - Enforcement of GPRS standard essential patents[20], the Commission  took  the
       view that it would be an abuse of dominance for the holder of a FRAND-encumbered SEP to seek and enforce an injunction against a potential
       licensee willing to enter into a license agreement on FRAND terms and conditions. These conclusions are  of  a  nature  as  to  discourage
       undertakings to engage into conduct contrary to Articles 102 of the Treaty.[21]

   46) Third, as the SEPs owned by Lenovo have already been licensed to a number of other companies, the Notifying Party is  constrained  in  its
       exercise of these patents.

   47) These factors lead to the conclusion that it is unlikely that Lenovo would be able to engage into an input  foreclosure  strategy  against
       competitors by refusing to license these SEPs to a willing licensee.

   48) Moreover, the Commission notes that Lenovo already owns the SEPs concerned and that it is already active  on  the  downstream  market  for
       supply of smart mobile devices. Given the small increment (less than [0-5]%) brought by the proposed transaction on the downstream  market
       for smart mobile devices, the Commission considers that it is unlikely that Lenovo's incentives would change so that  to  engage  into  an
       input foreclosure strategy.

   49) In addition, with regard to a possible customer foreclosure scenario, given the low presence of the Parties on the downstream  market  for
       smart mobile devices, the Commission considers that the risk of such foreclosure is minimal. As explained  before,  irrespective  of  both
       product and geographic market definition, the Parties' combined market share would never be greater than [5-10]%  in value or  [5-10]%  in
       volume.

   50) Finally, none of the respondents to the market investigation raised input or customer foreclosure concerns regarding the SEPs that  Lenovo
       has in relation to smart mobile devices.

   51) In the light of the above, the Commission takes the view that the proposed transaction is unlikely to give rise to any input  or  customer
       foreclosure concerns in relation to the SEPs that Lenovo already owns and the downstream market for smart mobile devices.

        5.3.     Acquisition of patents of Motorola Mobility by Lenovo

   52) As part of the proposed transaction, Lenovo is also  acquiring  approximately  [2000-3000]  design  patents  relating  to  the  ornamental
       appearance of Motorola Mobility's products or components and images displayed on a mobile phone or computer. Lenovo is also acquiring [100-
       200] utility patents and [<100] patent applications [Confidential – details of transaction].

   53) Google will however retain the vast majority of the Motorola Mobility's patent portfolio. For all of the retained patents  currently  held
       by Motorola Mobility, Google will grant Lenovo [Confidential – detail of transaction] license [Confidential – detail of transaction].

1 View of the Notifying Party

   54) Lenovo submits that the acquisition of these design and other patents will not give rise to any competition concerns.

   55) Concerning design patents, Lenovo submits that such patents can be easily worked around by adopting different design features and  do  not
       operate as a barrier to entry, or limit innovation. Such  design  patents  are  therefore  not  important  inputs  that  may  raise  input
       foreclosure concerns.

   56) Regarding implementation patents, the Notifying Party submits that the number of acquired patents is too low to give rise to any concerns.
       Furthermore, any existing encumbrances concerning these patents will continue to  apply,  including  any  existing  licensing  and  cross-
       licensing obligations –thus constraining Lenovo in the exercise of those patents.

2 Results of the market investigation and Commission's assessment

   57) In general, the market investigation did not raise concerns regarding the design and other patents  acquired  by  Lenovo.  One  respondent
       claimed that, as the patents it would acquire are not standard essential, Lenovo would not be bound by FRAND  commitments,  and  therefore
       would be able to charge high royalties to its competitors, which, as a result, would be eliminated from the market.

   58) The Commission considers that such concerns regarding the acquired patents are unfounded for a number of reasons.

   59) First, the total number of patents acquired by Lenovo through the proposed transaction remains low ([100-200] patents  and  [<100]  patent
       applications) as compared to the patent portfolios of many other smart mobile suppliers and major patent holders, such as Samsung,  Apple,
       Microsoft or Nokia.[22]

   60) Second, the Commission notes that none of the patents acquired has been declared standard  essential.  As  regards  non-SEPs  (utility  or
       design patents), the Commission considers, in line with its previous decisional practice, that the commercial importance of these  patents
       varies. Such patents are not part of a formal technical standard, the nature of many such patents may be  incremental,  and  it  is  often
       easier to design around a patent falling in this category. Non-SEPs may relate to features used to differentiate competing products on the
       market, thus creating dimensions on which firms compete. In this case, the Notifying Party confirmed  that  none  of  the  patents  to  be
       acquired by it under the proposed transaction is to be considered as commercially essential, nor  did  the  market  investigation  provide
       evidence of the contrary.

   61) Third, any existing licensing and cross-licensing obligations regarding the patents acquired will continue to apply,  and  therefore  will
       constrain Lenovo in its exercise of these patents.

   62) In the light of the above, the Commission considers that it is  unlikely  that  the  acquisition  of  these  patents  under  the  proposed
       transaction would give Lenovo enough negotiating power to impose excessive royalties to potential licensees. The Commission takes the view
       that, given the limited number of acquired patents which have not been declared either standard or commercially essential, it is  unlikely
       that Lenovo will have the ability to engage in any input foreclosure strategy. Similarly, given the low presence of  the  Parties  on  the
       downstream market for smart mobile devices the Commission considers that any customer foreclosure concerns can be excluded.

        5.4.     Licensing of Motorola Mobility's patent portfolio

   63) As already mentioned, the vast majority  of  Motorola  Mobility's  patent  portfolio  will  be  retained  by  Google.  During  the  market
       investigation, one respondent claimed that, if post-transaction Google were to provide Lenovo with more advantageous  licensing  terms  to
       the retained patents of Motorola Mobility, in comparison to the terms offered to other original  equipment  manufacturers  ("OEMs"),  this
       would significantly impact the competitiveness of the smart mobile devices market.

   64) First, the Commission notes that the concern  raised  relates  to  the  possible  post-transaction  licensing  practices  of  the  seller,
       Google.[23] In accordance with its previous decisional practice, the Commission considers that the conduct of the  sellers  falls  outside
       the scope of its assessment of the transaction under the Merger Regulation.[24]

   65) Second, even if Google were to offer more beneficial licensing terms to the merged entity, the  proposed  transaction  would  not  have  a
       material impact on competition in the smart mobile device sector because: (i) it is unlikely that the  Motorola  Mobility  business  would
       gain access to the patents on more favourable terms than it did prior to the proposed transaction, when it was the owner of these  patents
       (that is to say there is no merger-specific effect); and (ii) the Parties' combined market share on the downstream market for smart mobile
       devices remains low and, in particular, much lower than that of the largest suppliers.[25] Irrespective of  both  product  and  geographic
       market definition, the Parties' combined market share would never be greater than [5-10]% in value  or  [5-10]%  in  volume.  It  is  thus
       unlikely that other competing OEMs could be foreclosed or marginalised.

   CONCLUSION

   66) 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.

                                        For the Commission

                                        (signed)

                                        Joaquín ALMUNIA
                                        Vice-President

-----------------------
[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
      ('TFEU') has introduced certain changes, 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]   Publication in the Official Journal of the European Union No C 157, 24.5.2014, p. 2.

[3]   See below for relevant earlier Commission decisions.

[4]   See Commission Decision of 13 February 2012 in Case No M. 6381 - Google/Motorola Mobility, recital 41: the Commission took  the  view  that
      basic and feature phones may not fall into the same product market as smart mobile devices.

[5]   For example, in addition to mobile voice and text message communication, the latest smartphones  include  advanced  hardware  (e.g.  touch-
      screen interfaces, several gigabytes of flash storage, GPS navigation, WI-FI) and software (e.g. rich web  browsers,  full-featured  e-mail
      accounts, and a sophisticated user interface), and a range of other capabilities (e.g. music and video  streaming;  downloading;  playback;
      video calling; cameras and camcorders; GPS; radio receiver; personal digital assistant functions; USB, Bluetooth).

[6]   Commission Decision of 4 December 2013 in Case No 7047 - Microsoft/Nokia, recitals 15-16.

[7]   Commission Decision of 4 December 2013 in Case No 7047 - Microsoft/Nokia, recital 186.

[8]   Lenovo has recently acquired a small number of patents (around 110 patents from Unwired Planet Inc., which included 7 European patents  and
      14 US patents that have been declared standard essential to either the MNTS 3G standard or to the release 8 LTE 4G standard, both of  which
      are relevant to smart mobile devices).

[9]   These SEPs have already been licensed to a large number of companies, including [Confidential –  list  of  licensees]  which  count  for  a
      substantial proportion of competing suppliers.

[10]  Universal Mobile Telecommunications System (“UMTS”) is a third generation (“3G”) mobile telecoms system.  Long-Term Evolution (“LTE”) is  a
      fourth generation (“4G”) mobile telecoms system. Both systems have been developed and maintained by the 3rd Generation Partnership Project.

[11]  Commission Decision of 13 February 2012 in Case No M. 6381 - Google/Motorola Mobility, recital 51.

[12]  Commission Decision of 13 February 2012 in Case COMP/M.6381 - Google / Motorola Mobility, recital 60.

[13]  Commission Decision of 4 December 2013 in Case No 7047 - Microsoft/Nokia, recital 70. See also Commission Decision of 13 February  2012  in
      Case COMP/M.6381 - Google / Motorola Mobility, recitals 43 to 47 and Commission Decision of 2 July 2008 in Case COMP/M.4942 Nokia / Navteq,
      recital 140.

[14]  Commission Decision of 13 February 2012 in Case No M. 6381 - Google/Motorola Mobility, recital 61.

[15]  Source: Gartner and Canalys, January 2014.

[16]  Or have been subject to a covenant not to sue in favour of.

[17]  Such as [Confidential – list of Licensees].

[18]  Form CO, paragraph 108. By e-mail of 24 June 2014 the Notifying Party clarified that this  is  specifically  provided  for  in  the  Patent
      Purchase Agreement between Lenovo and Unwired Planet.

[19]  Commission Communication, Guidelines on the applicability of Article 101 of the TFEU  to  horizontal  co-operation  agreements  (OJ  C  11,
      14.1.2011, page 1-72), paragraph 287.

[20]  Commission Decision in Case COMP/C-3/39.985- Motorola Mobility - Enforcement of GPRS standard essential patents.

[21]  See also Court of Justice's judgment in Case C-12/03 P Commission v Tetra Laval, ECLI:EU:C:2005:87, paragraph 74.

[22]  The patents acquired by Lenovo constitute a marginal fraction of the portfolio acquired by Google in  2012,  which  already  at  that  time
      proved to be small. See Commission Decision of 13 February 2012 in Case No M. 6381 - Google/Motorola Mobility, recital 110.

[23]  Concern was also raised during the market investigation in relation to Google's and other OEMs' potential anti-competitive conduct  on  the
      market for smart mobile devices. However, as these concerns do not fall into the remit of the Merger Regulation, they will not  be  further
      analysed in this decision.

[24]  Commission Decision of 4 December 2013 in Case No 7047 - Microsoft/Nokia, recital 224.

[25]  Such as Samsung or Apple.

-----------------------
 In the published version of this decision, some information has been omitted pursuant to Article 17(2) of Council Regulation (EC)  No  139/2004
 concerning non-disclosure of business secrets and other confidential information.  The  omissions  are  shown  thus  […].  Where  possible  the
 information omitted has been replaced by ranges of figures or a general description.

                                                                  PUBLIC VERSION

                                                                 MERGER PROCEDURE