Global Antitrust Enforcement Under Scrutiny as China Investigates Nvidia's Practices

Antitrust enforcement has become an essential global practice to ensure fair competition and foster innovation, and companies should not use geopolitical tensions as excuses for breaching their legal commitments, said top industry experts on Tuesday. Their comments followed an investigation launched by China's State Administration for Market Regulation (SAMR) into US chipmaker Nvidia over suspected violations of anti-monopoly laws and its commitments during the 2020 acquisition of Israeli chip designer Mellanox Technologies Ltd.

While the specific details of the investigation remain undisclosed, Deng Feng, a law professor at Peking University, pointed out that Nvidia has stopped supplying several GPU products to China due to US export controls. This, he said, breached Nvidia's previous commitments and harmed Chinese companies, resulting in widespread dissatisfaction in the industry.

In 2019, when Nvidia made its $6.9 billion bid to acquire Mellanox, concerns arose about China potentially blocking the deal due to escalating US-China trade tensions. However, the Chinese government later approved the acquisition in 2020. As part of the approval, Nvidia was required to maintain product supply and ensure interoperability between Nvidia's GPU accelerators, Mellanox's networking equipment, and related software for the Chinese market.

Deng emphasized that export controls should not justify Nvidia's failure to meet its obligations. If the company could not fulfill its commitments, it was expected to provide alternative solutions to mitigate any negative competitive effects.

Following the announcement of the investigation, Nvidia's shares dropped by over 2% in the US stock market on Tuesday. In response, Nvidia stated that the company is committed to honoring its business commitments and is ready to answer any regulatory inquiries regarding its operations.

Liu Xu, a senior research fellow at Tsinghua University, noted that antitrust enforcement in high-tech sectors has become a global consensus, especially with the rise of the digital economy. Concerns about Nvidia’s monopolistic behavior have been widespread, with antitrust authorities in the US and the European Union also investigating the company for potential abuses of market dominance.

Liu explained that China’s investigation aligns with its broader antitrust enforcement goals, particularly targeting multinational mergers and acquisitions. Since 2008, China has conditionally approved 63 merger cases, 60 of which involved multinational companies. He suggested that Nvidia's suspected monopolistic practices have disrupted industrial and supply chains, which is why China is scrutinizing the company.

Zhong Gang, executive director at the Competition Law Research Institute at East China University of Political Science and Law, added that the investigation is consistent with China’s aim to protect fair market competition, promote innovation, and safeguard consumer interests.

According to Nvidia’s report from last month, about 13% of its sales this year came from customers based in China. A report by CITIC Securities indicated that this investigation could benefit China’s domestic chip industry by promoting the use of local chips and boosting market sentiment in the short term.

Overall, the investigation reflects China’s broader push to regulate monopolistic behavior and strengthen its domestic tech industry amid increasing global scrutiny of high-tech sector practices.