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By | Joe Fay 31st May 2011 11:15

EU parks disk drive mergers ahead of competition probe

Concerns over pricing, innovation

The European Commission has run up red flags over the competition implications of the disk drive industry's current game of musical takeovers.

Brussels has said that following a preliminary probe, it will conduct "in-depth investigations" into both Seagate's proposed takeover of Samsung's hard disk drive operations, and Western Digital's planned buy-up of Hitachi's storage business.

The Seagate/Samsung deal was first announced on 29 April. The Western Digital/Hitachi deal was unveiled on 19 April.

The EU has now given itself 90 working days to investigate the deals, meaning the companies concerned may have to wait until 10 October to see if Brussels believes either of the deals would "significantly impede effective competition to the extent that would be detrimental to customers and consumers in the European Economic Area".

Commission Vice President in charge of competition policy Joaquín 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."

In a statement, the commission notes that the preliminary probe into the Seagate deal had uncovered concerns over the pricing implications of the merger, as well as over its implications for innovation, and the "risk of coordination between HDD manufacturers".

It also raised questions over the effect on TDK's heads operation, and the effect on the external storage devices market.

Pricing concerns has also been raised over the WD/Hitachi deal, as well as "coordination" fears, and concerns for competition and innovation in the ESD (external storage device) market. ®

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