Cadence settles with FTC

Cadence agrees to allow independent software developers to develop and sell interfaces to its microchip layout environments.

CNET News staff
2 min read
Competition is key, according to the Federal Trade Commission. In that spirit, it has reached a settlement with Cadence Design Systems (CDN) to ensure that manufacturers of software used to automate the design of integrated circuits have the ability to break into the market without disadvantages.

Cadence has agreed to settle charges that its $400 million acquisition of Cooper & Chyan Technology (CCTI) announced last October would significantly reduce competition for software used to automate the design of integrated circuits, or microchips.

The FTC was concerned that the merger would reduce the incentives of Cadence to permit competing suppliers of routing tools to obtain access to Cadence's layout environments. The result would be less innovation, higher prices, and reduced services, according to the FTC. Moreover, the government organization suggested that routing tool developers would unfairly face barriers to entering the routing tool market successfully.

Cadence is a leading supplier of microchip layout environments and Cooper & Chyan is the only firm with a commercially viable router used to automate the solution of unique engineering problems associated with the increasingly smaller scale of cutting-edge microchip design, the FTC said. A combination of the two companies could limit further development in the area, the commission added.

"When considering the effects of mergers in dynamic, innovative high-tech markets...it is particularly important to investigate whether such mergers will create barriers to entry. New entrants often bring innovation to the market, and the threat of entry leads incumbents to innovate," said three of the four members of the commission that voted in favor of this resolution.

The FTC and Cadence reached a settlement that would require the company to allow developers of commercial integrated circuit routing tools to participate in the Cadence "Connections Program," as well as any other software interface programs that allow independent software developers to develop and sell interfaces to Cadence layout tools and environments.

The goal is to open independent software interface programs to potential competition; to prevent the need for dual entry in the markets for these types of routing tools and layout environments; and to ensure that other software developers will continue to invest resources to develop and sell routing tools that will compete with Cooper & Chyan?s technology.

The commission noted that a consent agreement is for settlement purposes only and does not constitute an admission of a law violation.