Lujiazui Photo:VCG

Cisco Systems Inc's purchase of Acacia Communications Inc has been approved by China's antitrust regulator on condition that the companies ensure fair competition, the watchdog said.

The State Administration for Market Regulation's (SAMR) move brings the $4.5 billion deal to a close after approval from other countries including the US.

Network gear maker Cisco first announced its intention to acquire optical components manufacturer Acacia in 2019, as the firm was looking to capture more business from telecoms companies.

China's approval was the only remaining closing condition for the deal, Cisco said in July last year.

The SAMR on Tuesday said the Acacia acquisition can proceed, provided that the companies continue to service existing contracts in China and continue to supply customers in China "in accordance with the principles of fairness, reasonableness and non-discrimination".

One of China's top market regulators, SAMR has authority akin to the European Commission to approve acquisitions involving multinational corporations.

In the past, China has gone against decisions taken by other regulators overseas.

In 2018 Qualcomm Inc's planned $44 billion takeover of Dutch chipmaker NXP Semiconductors NV collapsed after the regulator stalled on issuing public approval.

That deal's dissolution came months after Singapore-based chipmaker Broadcom withdrew its bid to purchase Qualcomm after a warning from then US President Donald Trump's administration stated that the deal would give China an upper hand in technology development.

Last year, however, China approved two smaller acquisitions in the increasingly politicized microchip industry - Infineon Technologies' $10 billion purchase of US-based Cypress Semiconductor and US chipmaker Nvidia's $6.9 billion deal for Israel's Mellanox Inc.

Semiconductor machinery maker Applied Materials' planned acquisition of Kokusai Electric remains subject to SAMR approval, as does Nvidia's pending $40 billion purchase of British chip designer Arm.

Accelerating a crackdown on anticompetitive behavior in China's booming internet space, the SAMR recently launched an antitrust probe into e-commerce giant Alibaba Group Holding.

Reuters