Despite fears that the Western Digital buyout might make it a little too powerful, the European Commission concluded that the takeover would not harm competition in the data storage market in Europe.
In October, Western Digital agreed to buy Sandisk in a $19 billion deal that will increase its ability to make flash memory storage chips used in smartphones and tablets.
The deal was announced in October. that Western Digital had announced plans buy chip maker Sandisk for around $19 billion. Flash specialist Sandisk is ranked by IDC as the largest manufacturer of NAND flash memory chips. The market for NAND flash chips was worth $28.9 billion in 2014, according to IDC.
The Commission found that the only overlap between the activities of the hard disk manufacturers is in selling flash memory storage systems and solid-state drives to the enterprise market. In this case, the effects of the merger on competition will be minimal, it has ruled, despite their relatively high combined market share. The presence of Intel, Toshiba, Micron and Samsung in the same market will exert sufficient competitive pressure to prevent the creation of a Western Digital hegemony, the European Commission has ruled.
The Commission also looked at the vertical link between Sandisk’s production of flash memory and the downstream markets for enterprise flash memory storage systems. With flash memory an essential component of solid state drives and other flash memory storage systems the EC investigators have researched whether Western Digital will be in a position to block competitors from access to flash memory.
It also studied the likelihood that competing producers of flash memory might find themselves with an unsustainable customer base. However, SanDisk’s presence on the upstream flash memory market was judged as ‘limited’ and the presence of several active competitors makes this a manageable risk.
Commissioner Margrethe Vestager, in charge of competition policy, said in a statement that she was pleased that the Commission had been able to ensure that this multi-billion dollar deal in a fast-developing industry can go ahead without delay.