DOJ Focuses on Innovation in Thales’ Acquisiton of Gemalto

In February 2019, the Department of Justice’s Antitrust Division required divestitures from Thales in order for the company to proceed with its proposed $5.64 billion acquisition of Gemalto.

Why This Merger Mattered

Prior to the transaction, Thales and Gemalto were the world’s leading providers of General Purpose Hardware Security Modules (GP HSMs). These devices are critical components in complex encryption systems that safeguard sensitive government and corporate data.

Breaking into the GP HSM market is no small task—successful entry demands substantial time, capital investment, and technical expertise to design and develop products with the same level of functionality, interoperability, and reliability as established offerings. Competition is therefore crucial, as it drives innovation and ensures that customers benefit from higher-quality, more secure solutions.

DOJ’s Remedy

To address these concerns, the DOJ required Thales to divest its GP HSM business, including intellectual property and research capabilities. This remedy was designed to ensure that competitors could continue to innovate and bring advanced data security solutions to market without delay.

Key Takeaway

The Thales/Gemalto case illustrates a broader principle:
👉 The Antitrust Division closely examines mergers for their impact on innovation, not just price.

In markets where security, reliability, and cutting-edge technology are critical, preserving competition means safeguarding the pace of innovation itself.

Andre Barlow