The alternative would have been for the Commission to open a four month investigation in to the merger. Such an investigation resulted in the Commission blocking General Electric’s $45 billion acquisition of Honeywell last year. A significant factor in the HP-Compaq decision is believed to be the absence of any significant objection from rivals such as Dell, IBM and Sun.
The Commission's analysis focused on the combination of HP's and Compaq's activities in the markets for PCs, servers, PDAs, storage solutions and services. In addition, the Commission also assessed the impact of the merger on HP's joint development of the Itanium processor with Intel as well as the importance of HP's increased opportunity for joint sales of PCs and printers following the integration of Compaq's PC products.
With regard to PCs, the Commission concluded that the merged entity will continue to face strong competition in Europe from rivals IBM, Dell and Fujitsu-Siemens, which together with the absence of significant barriers to entry and the practice of non-exclusive contractual relationships between retailers and manufacturers would prevent the new HP from any attempt to raise prices significantly.
As to the potential impact of HP and Intel's jointly developed Itanium processor, the Commission concluded that it was in HP and Intel's interests to guarantee unrestricted access by competitors.