European Commission approves Samsung® merger
The European Commission keeps a strict vigil upon the European market to ensure fair trade and healthy competition. When Seagate made a bid to acquire technology giant Samsung's hard disk drive division last April, and another bid came from Western Digital for the acquisition of Hitachi's disk drive manufacturing unit, the watchdog immediately set up an inquiry into the propositions.
After looking into the matter with concerns for a resulting consolidation in the hard drive market, European Commission has given the approval for the deal between Samsung and Seagate. At present, there are five hard disk manufacturers including Toshiba, which would reduce to three in number once both the deals are through. The investigators felt that, with three competitors remaining, a consumer would still get sufficient options and there would not be any problem in the coordination among the suppliers, either. Currently, Toshiba has 10 per cent market share in the sector.
“Although the merger will further consolidate markets that are already highly concentrated, the Commission concluded that the transaction would not significantly impede effective competition in EEA (the European Economic Area) or any substantial part of it,” European Commission said.
The approval came under the European Union Merger Regulation. The main apprehension in the investigation was related to the market for 3.5-inch desktop hard disk and 2.5-inch mobile hard disk, which are not the main products for the Samsung division of hard disks. The deal was examined, irrespective of similar offers from Western Digital, for buying out Hitachi hard disk drives and solid-state drive units. The decision on Western Digital deal is still awaited.
Let us hope that the mergers bring more innovation in the hard disk technology, besides just the marketing advantages.