The US Federal Trade Commission is blocking a proposed $330 million purchase of PLX by IDT saying the combined firm would have a near-monopoly on certain computer components.

Both companies make PCIe switches, which perform critical connectivity functions in computers. Richard Feinstein, director of the FTC's Bureau of Competition said that the combination of IDT and PLX would hurt competition and lead to higher switch prices, lower innovation in the marketplace, and reduced customer service.

The combined firm would have a market share exceeding 85 per cent in the global PCIe switch market, the commission said. IDT makes a range of semiconductor components used in communications, computing, and consumer applications. It proposed buying PLX, headquartered in Sunnyvale, California, in April.

FTC said customers have traditionally used the competition between IDT and PLX to play one company against the other and achieve lower prices.