After Western Digital moved to acquire Hitachi Global Storage Technologies in March and Seagate announced their purchase of Samsung’s storage operations in April, that left Toshiba as the only other remaining competitor in the hard drive industry.
That sudden lack of competition has raised red flags among regulators, and now European Commission (EC) regulators are launching an investigation into the WD and Hitachi mergers to investigate if any antitrust violations will exist due to the lack of competition.
"Hard drives are the backbone of the digital economy," Joaquin Almunia, vice president of competition policy at the EC, said in a statement on Monday. "The Commission will carefully examine if effective competition is preserved and innovation encouraged."
According to IHS iSupply research conducted in April, the mergers give Western Digital a 50% share of the HDD market, followed closely by Seagate’s 40% share. In stark contrast, however, the industry’s third and final competitor, Toshiba, only has a comparatively tiny 10% share.
The European Commission has a deadline of October 10th, 2011 to complete their antitrust investigation. They will separately assess the mergers and examine what effects they will have on HDD pricing and supply for both business and consumer purchases. If the mergers are found to have a detrimental effect, the EC has the power to try to block the closing of the deals.
Western Digital has postponed the closing of the Hitachi acquisition until the fourth quarter of the year, as the investigation has marred their plans of sealing the deal in Q3. The Seagate/Samsung merger is not expected to be completed until the end of 2011, if not blocked by the EC.
