Commission approves Synopsys’ acquisition of Ansys subject to conditions

This article is brought to you in association with the European Commission.

The European Commission has approved, under the EU Merger Regulation, the proposed acquisition of Ansys, Inc. (‘Ansys‘) by Synopsys, Inc. (‘Synopsys‘). The approval is conditional upon full compliance with the commitments offered by the parties.

The Commission’s investigation

The Commission investigated the impact of the transaction in the global markets for the supply of: (i) optics software; (ii) photonics software; and(iii) electronic design automation (‘EDA’) software tools used for the design of chips, where Synopsys and Ansys’s activities actually or potentially overlap.

The Commission also assessed the merged entity’s potential ability and incentive to offer bundles or to hamper the interoperability of: (i) different EDA software tools; or (ii) EDA software tools and semiconductor intellectual property (‘IP’) solutionsforsystem-on-chip designs,of which Synopsys is a leading provider.

The Commission’s investigation showed that, while the companies’ activities are largely complementary, the transaction, as initially notified, would have reduced competition in the global markets for the supply of: (i) optics software simulating how light behaves in large macro-scale systems (e.g., screen or car headlight); (ii) photonics software simulating how light behaves in smaller nano-scale optical systems (e.g., digital camera or solar panel); and (iii) register-transfer-level power consumption analysis software, which is an EDA software tool used at the early stage of the chip design process to check its power consumption.

The Commission found that the transaction would have resulted in high combined market shares as well as high concentration levels in the above markets. The Commission also found that, after the merger, there would not be enough alternative competitors to exert sufficient competitive pressure on the merged entity. The transaction, as notified, would have led to higher prices and less choice for customers.

The proposed remedies

To address the Commission’s competition concerns, the parties offered to divest to a suitable purchaser the entire overlap in terms of the merging parties’ respective activities in the markets where the Commission identified significant competition concerns, namely:

• Synopsys’ optics and photonics software, including Code V, LightTools, LucidShape, RSoft and ImSym.
• Ansys’ register-transfer-level power consumption analysis software PowerArtist.

The commitments fully address the competition concerns by ensuring that there will be sufficient competition and choice in the global markets for the supply of optics, photonics and register-transfer-level power consumption analysis software.  

The Commission will approve a suitable purchaser of the divested businesses in a separate procedure. Synopsys can only implement the acquisition of Ansys following that approval.

Following the positive feedback received during the market test, the Commission concluded that the transaction, as modified by the commitments, would no longer raise competition concerns.

The decision is conditional upon full compliance with the commitments. Under the supervision of the Commission, an independent trustee will monitor their implementation.

Companies and products

Synopsys, headquartered in the US, mostly offers EDA software, services, and hardware used to design semiconductor devices, such as chips. Additionally, Synopsys offers semiconductor IP.

Ansys, headquartered in the US, mostly offers multi-physics simulation and analysis software and services to simulate and analyse the behaviour of a product, process, and/or system via digital models. Some of these tools are EDA tools, exclusively used by chip designers in their chip design workflows.

For more information

The transaction was notified to the Commission on 11 November 2024.

The Commission has the duty to assess mergers and acquisitions involving companies with a turnover above certain thresholds (see Article 1 of the EU Merger Regulation) and to prevent concentrations that would significantly impede effective competition in the European Economic Area or any substantial part of it.

The vast majority of notified mergers do not pose competition problems and are cleared after a routine review. From the moment a transaction is notified, the Commission generally has a total of 25 working days to decide whether to grant approval (Phase I) or to start an in-depth investigation (Phase II). If commitments are proposed in Phase I, the Commission has 10 additional working days, bringing the total duration of a Phase I case to 35 working days, such as in this case.

More information will be available on the Commission’s competition website, in the public case register under the case number M.11481.