Commission approves hard-drive takeover following buyer commitments

The Commission had expressed concern that Western Digital's proposed takeover of Hitachi Global Storage Technology (HGST) would lead to an uncompetitive market, but approved the deal following commitments from the US firm.

Western Digital has formed a "binding agreement" forcing it to find a purchaser for "essential production assets for the manufacture of 3.5-inch HDDs" before it concludes the deal for HGST, the Commission said. The Commission itself will approve whether or not any prospective purchaser is "suitable", it said.

The assets Western Digital has to "divest" include a production plant, the transfer of staff and either the transfer or licensing of intellectual property rights to the buyer. Western Digital must also supply HDD components to the purchaser, the Commission said.

The Commission said that the "divestment" would mean Western Digital's proposed acquisition of HGST "will not significantly impede effective competition" across the European Economic Area.

"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," Joaquín Almunia, EU Competition Commissioner, said.

"The proposed divestiture will ensure that competition in the industry is fully restored before the merger is implemented," he said.

The Commission had assessed the deal in the context of a recent merger in the sector involving Seagate and Samsung. It had concerns that the Western Digital/HGST takeover and Seagate/Samsung merger would have left the market for 3.5-inch desktop and consumer electronics HDDs short of suppliers and that that would ultimately have negatively affected price and choice for consumers.

Major merger or takeover deals involving companies with big market share are ruled on by the European Commission using its Merger Regulation.

Earlier this year the Commission announced separate investigations into both the Seagate/Samsung and Western Digital/HGST deals. A Commission assessment of the proposed Western Digital/HGST takeover at the time found that a combined company would be the leader in the HDD market.