Commission opens in-depth
investigations into two proposed acquisitions in the hard disk drive sector
By Amelia Torres Esq. and Marisa Gonzalez Iglesias Esq.
SUMMARY: "Two separate investigations under the EU Merger Regulation were opened into two proposed concentrations in the hard disk drive ("HDD") sector. The first concerns the planned acquisition of the HDD business of Korean firm Samsung by Seagate Technology. The second concerns the storage business of Japan's Hitachi by Western Digital Corporation. EU Commissioner Almunia said: "...the proposed acquisitions will further reduce competition."
The European Commission has opened two separate in-depth investigations
under the EU Merger Regulation into two proposed concentrations in the hard
disk drive ("HDD") sector. The first transaction concerns the planned
acquisition of the HDD business of Korean firm Samsung by Seagate Technology of
the US. The second transaction concerns the planned acquisition of the storage
business of Japan's Hitachi by Western Digital Corporation of the US. HDDs
systems are used in a variety of professional and consumer electronic goods to
store and access digital data, including computers, digital video recorders and
camcorders. Commission Vice President in charge of competition policy Joaquin
Almunia said: "Hard drives are the backbone of the digital economy. The
sector has already experienced significant consolidation and the proposed
acquisitions will further reduce competition. The Commission will carefully
examine if effective competition is preserved and innovation encouraged."
The Commission's initial market investigation indicated that both transactions
raise potential competition concerns. There are currently five HDD
manufacturers worldwide: Seagate, Western Digital, Hitachi (recently renamed
Viviti Technologies) Toshiba and Samsung.
A merger between Seagate/Samsung, the first deal to be notified on 19 April,
would consolidate Seagate's leading position in the overall market for HDDs,
particularly in the manufacture of 3.5" desktop HDDs where it would only
face two competitors (Western Digital and Hitachi). The Western Digital/Hitachi
transaction, which was examined in the light of the previous deal, would create
the world's market leader in the overall HDD market. For 3.5'' desktop HDDs in
particular, the only competitor would be Seagate/Samsung. For 2.5'' mobile
HDDs, it would only face Seagate/Samsung and Toshiba.
The opening of in-depth inquiries does not prejudge the final result of the
investigations. The Commission now has 90 working days, i.e. until 10 October,
to reach final decisions on whether the transactions would significantly impede
effective competition to an extent that would be detrimental to customers and
consumers in the European Economic Area (EEA)
Authors are from the European
Commission Press Release Office (Brussells, Belgium).
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