Western Digital will be allowed to take over the hard-disk drive business from Hitachi, but only if it sells off a 3.5-inch hard-disk drive production plant.
The ruling was made by the European Commission yesterday. Following an investigation, the Commission decided that the merged entity would only face competition from the recently merged Seagate-Samsung. It was feared this lack of competition would force up prices to consumers, hence the ruling that some of Western Digital's production assets be sold off.
"Hard-disk drives are a key component of computers and other sophisticated electronic devices as they are used to store a growing bulk of data in the digital economy. The proposed divestiture will ensure that competition in the industry is fully restored before the merger is implemented," said Competition Commissioner Joaquín Almunia.
However, had Western Digital notified the Commission just one day earlier of its planned takeover of Hitachi's hard-disk drive business, recently renamed Viviti Technologies, it is unlikely to have had to make any concessions. The Commission was notified of the Seagate-Samsung merger one day earlier, on April 19, and approved. But on a "first come, first served" basis the Western Digital takeover had to be assessed in light of that decision.
After the Seagate-Samsung merger, there remained just four active hard-disk drive suppliers worldwide: Western Digital, Hitachi, the merged Seagate-Samsung and Toshiba. The proposed Western Digital-Hitachi transaction would have reduced the number of competitors to three and in some markets to just two.
Western Digital cannot complete the acquisition of Viviti until it has found a suitable purchaser, approved by the Commission, for its 3.5in hard-disk drive production assets.
Hard-disk drives store and allow access to data. They are used in desktop computers and laptops, consumer electronics devices such as DVR players, as well as servers and data centres run by companies.