IFT declares itself competent to review the merger between Plantronics and HP

The Federal Telecommunications Institute (IFT) said that it was the authority responsible for analyzing the effects and, where appropriate, approving the concentration of technology companies in Mexico HP y Plantronics in the same entity, after both companies announced their merger in the United States after an agreement valued at 3,300 million dollars.

The resolution of the IFT arose after the position taken by the Federal Commission of Economic Competition (Cofece) as it is also considered the competent authority to analyze the merger of these two companies and its effects on the Mexican market.

According to the Federal Telecommunications Institute, Cofece carries out the processing and notification of the HP-Plantronics merger, filed in file CNT-073-2022 of Cofece itself, but this should be a matter to be resolved by the IFT.

HP Inc. and Plantronics Inc. announced in March an agreement to buy and sell Plantronics, the objective of which is to strengthen HP in the business of providing services and physical products for hybrid work.

HP is one of the leading companies in the mass computing business at a global level, while Plantronics also leads in the segment of peripheral devices such as telephones and headsets.

In the argument to obtain the approval of its shareholders to the sale agreement, HP and Plantronics, also known as the Poly brand, said that the peripherals business mobilizes a business valued at 110,000 million dollars worldwide and with annual growth of 9%, while telecommunications solutions for hybrid work represent a business of 120,000 million dollars and with growth of 8 percent.

For the Federal Institute of Telecommunications of Mexico, the business area in which HP and Plantronics participate support the definition of that authority to review their concentration agreement, in addition to the fact that they also maintain commercial alliances with other companies that do participate more directly in telecommunications, as they are Telmex, Order, Total play o Alestra which are regulated by the IFT itself.

“We identified (at the IFT) that this concentration involves the design, manufacture and marketing of terminal equipment and solutions for conferences and peripherals (…) All these products and services are specifically designed, manufactured and marketed to be integrated with telecommunications services of voice, that is, calls and audio conferences and/or video calls and video conference services; voice and video services, which belong to the telecommunications sector, specifically the services offered by concessionaires of voice and video telecommunications services”, argued the IFT.

“They are also integrated with voice and video service provision systems over the Internet; Examples of providers of these systems are those known as Webex, Microsoft Teams, Zoom and Skype; and also, those products and services provided by Poly are integrated with digital platform services that provide free voice and video services over the Internet, such as those known under their commercial name such as WhatsApp, Skype and Zoom”, added the regulator.

As part of its argument to hear the case between Paltronics and HP, Cofece indicated that a judicial authority confirmed its power to regulate matters of economic competition that reach, among others, products and services of social networks, such as Paltronics services for hybrid work through technologies such as WhatsApp y Skypealso social media platforms.

“The judicial decision determines that Cofece is competent to know the markets for online search services, social networks and cloud computing services. The IFT, for its part, is competent to learn about the market for mobile operating systems”, indicated the Federal Commission of Economic Competition in one of its communications.

In its resolution P/IFT/130722/413, the IFT ordered its Economic Competition Unit (UCE) to carry out the necessary procedures that allow it to receive from Cofece the information in the CNT-073-2022 file.

If there are disagreements between Cofece and IFT over the resolution of the Plantronics-HP case, this would be the fourth time that both regulatory authorities collide over the definition of business concentrations and in particular when these matters are related to digital markets, as according to the reporter Rodrigo Riquelme in this information.

Meanwhile, the HP and Paltronics companies completed their full integration into the US market on August 29.

“HP completed the deal as a $40 per share all-cash transaction, implying a total enterprise value of approximately $3.3 billion, including Poly’s net debt. The transaction was financed through a combination of balance sheet cash and new debt,” HP told shareholders.

“Approximately 75% of office workers are investing in upgrading their home setup, so the combination of Poly and HP is a win-win for both organizations. More importantly, bringing these two companies together will provide end users with the essential hardware, software and services needed to successfully navigate hybrid work experiences now and in the future.”