While the European Commission approved the proposed purchase of Hitachi Global Storage Technology (HGST) by rival Western Digital, the approval depends on the sale of essential production assets for 3.5″ hard disk drives, including a production plant, and accompanying measures.
In other words Western Digital cannot complete the HGST deal until it has found a suitable purchaser that is approved by the commission.
“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 commission vice-president in charge of competition policy Joaquín Almunia.
The Commission ruling comes after an examination that showed there are separate worldwide markets for HDDs based on their form factor (3.5″ or 2.5″) and end use (such as desktop computers, mobile computers, consumer electronics devices and enterprise business critical and mission critical applications).
On the 3.5-inch hard drive market the new merged company will face competition only by the recently merged Seagate/Samsung.
To gain regulatory clearance, Western Digital proposed to divest essential production assets for the manufacture of 3.5″ HDDs, including a production plant, the transfer or licensing of the IP rights used by the divestment business, the transfer of personnel and the supply of HDD components to the divestment business.