Microsoft-Nokia deal gets EU nod

Fate of factory near Chennai remains uncertain

The European Union anti-trust regulators have approved Microsoft's $7.3 billion acquisition of Nokia's mobile device business without any conditions.

However, the fate of Nokia's factory at Sripermbudur, near Chennai, is still uncertain as Nokia is caught in a dispute with the Indian Tax (I-T) Department.

According to a Reuters report, the European Commission said on Wednesday, "the Commission concluded that the transaction would not raise any competition concerns," adding that it was unlikely "to lead to competitors being shut out from the market".

In September this year, Microsoft agreed to buy Nokia’s mobile phone business, including the brand and manufacturing facilities. It is expected that Nokia’s devices and services business will be part of Microsoft by the end of the quarter ending March 2014.

Nokia is involved in a legal tussle with the Income Tax (I-T) Department over alleged tax liability of Rs 6,500 crore. The matter is being heard by the Delhi High Court.

Saying the I-T department’s claim wasn’t acceptable, Nokia offered to pay a deposit of Rs 2,250 crore and urged the court to unfreeze its assets before December 12 this year. This, it said, would pave the way to including its facility near Chennai in the $7.3-billion deal with Microsoft.

A Nokia spokesperson said, “Nokia remains firmly committed to moving its Indian assets to Microsoft, and will continue to cooperate with Indian authorities to ensure a successful transfer. But time is of essence. Nokia calls on the Indian government and tax authority to work with urgency so that the uncertainty about the site’s future can be dispelled before the deadline of December 12…In case the asset isn’t allowed to be transferred, Nokia will seek a contract manufacturing agreement with Microsoft for a period of up to 12 months.”

About 35,000 people are employed directly and indirectly by Nokia at the Sripermbudur factory. Around 8,000 employees work inside Nokia's factory and half of them are women. The average age of the employees is 22-24 years. Company officials said of the 8,000 staff, 7,000 were permanent.

The factory is Nokia's largest in the world and one of its most productive units.