Commissioner Margrethe Vestager, in charge of competition policy, stated: "I am pleased that we have been able to ensure that this multi-billion dollar deal in a fast-developing industry can go ahead without delay. We have worked efficiently, in cooperation with our US counterparts, to scrutinise this takeover in the strategically important IT sector and concluded that there would be no adverse effects on either retail or commercial customers".
The Commission's investigation
Western Digital and SanDisk both provide computer storage solutions, such as hard disk drives or solid state drives based on flash memory, for the consumer electronics and enterprise markets. The Commission found that the overlap between the activities of the companies is effectively limited to the market for enterprise space for flash memory storage solutions, including enterprise solid-state drives.
The Commission therefore assessed the effects of the transaction on competition in this area. The Commission found that, despite the merged entity's relatively high combined market share, the transaction does not raise competition concerns. In particular, strong and established players such as Intel, Toshiba, Micron and Samsung are active on the market and will continue to exert competitive pressure on the merged entity.
The Commission also investigated the vertical link between SanDisk's activities in the production of flash memory and the downstream markets for enterprise flash memory storage solutions. Flash memory is an essential input for solid state drives and other flash memory storage solutions. The Commission concluded that the merged entity would be unable to shut out competitors from access to flash memory and that competing producers of flash memory would still have a sufficient customer base. This is because SanDisk's presence on the upstream market for flash memory manufacturing is limited and several competitors will remain active in the production of flash memory, solid state drives and other flash memory storage solutions.
Therefore, the Commission concluded that the transaction would raise no competition concerns.
The transaction was notified to the Commission on 22 December 2015. The Commission cooperated closely with the US Federal Trade Commission during its investigation.
Companies and products
Western Digital manufactures and supplies hard disk drives for consumer use in personal computers and consumer electronics as well as for enterprise use in cloud computing and data centres. It also produces enterprise class solid state drives based on flash memory technology.
SanDisk specialises in the production of flash memory storage solutions, including solid state drives for enterprise and consumer use as well as removable cards, USB flash drives and embedded flash products for mobile devices and consumer electronics.
A hard disk drive is a digital storage solution that uses one or more rotating metal or glass disks with magnetic surfaces to store and allow access to data. While the disk is spinning, a read/write head on a moving actuator arm accesses the data.
A flash-based solid state drive is a storage solution that uses flash memory to store digital data. It does not contain either an actual disk or a drive motor to spin a disk and instead uses integrated circuit assemblies as memory to store data persistently.
Merger rules and procedures
The Commission has the duty to assess mergers and acquisitions involving companies with a turnover above certain thresholds (see Article 1 of the Merger Regulation) and to prevent concentrations that would significantly impede effective competition in the EEA or any substantial part of it.
The vast majority of notified mergers do not pose competition problems and are cleared after a routine review. From the moment a transaction is notified, the Commission generally has a total of 25 working days to decide whether to grant approval (Phase I) or to start an in-depth investigation (Phase II).