FTC sticks spanner into Hitachi Global Storage buy

The US FTC is going to force Western Digital to sell off assets if it wants to buy Hitachi Global Storage.

The deal, which was expected to go through on the nod, has suddenly turned out to be anticompetitive unless Western Digital is happy to dump a few of its assets, the FTC said.

Western Digital will have to put any assets used to manufacture desktop hard drives up for sale on eBay as a condition of its $4.5 billion acquisition of rival Hitachi Global Storage Technologies.

What the FTC is concerned about is that Western Digital would be left as one of two companies that control the worldwide market for desktop hard disk drives.

The FTC said in a press release that “protecting competition in the high-tech marketplace is a high priority.”

Richard Feinstein, director of the FTC’s Bureau of Competition, said in a statement. “This order will ensure that competition continues in the worldwide market for desktop hard disk drives, and that consumers are not faced with higher prices or reduced innovation as a result of this deal.”

Western Digital has said it will sell off assets to competitor Toshiba as a way to address regulatory concerns.

The agreement will enable Toshiba to manufacture 3.5-inch hard drives for the desktop and consumer electronics markets and will allow Toshiba to expand its manufacturing of 3.5-inch drives for the near-line storage market, Western Digital said.

Western Digital also announced that it has agreed to purchase Toshiba Storage Device (Thailand), a hard drive manufacturing division that suspended operations after massive flooding in the country in 2011.

The Toshiba transactions are conditional on Western Digital’s closing of the Hitachi deal, the company said.

Western Digital announced a year ago that it planned to acquire Hitachi Global Storage Technologies from Hitachi. The deal, as proposed, would have given Western Digital a larger share of the data centre internal disk drive market.