Antitrust Law Daily Wrap Up, ANTITRUST NEWS: FTC Order Approving Acquisition in Disk Drives Market Modified as to Divestitures, (May 9, 2013)

By William Zale, J.D.

The FTC has approved and issued a modified final Decision and Order settling charges that Western Digital’s proposed acquisition of rival Hitachi Global Storage Technologies Ltd. would have been anticompetitive in the market for hard disk drives used in desktop personal computers (In the Matter of Western Digital Corp., FTC File No. 111-0122, Docket No. C-4350). The proposed order settling the FTC’s charges, first announced on March 5, 2012, required Western Digital to sell assets used to manufacture and sell desktop computer hard disk drives to Toshiba Corporation to resolve the agency’s competition concerns.

In finalizing the consent Decision and Order, the FTC approved several modifications to the proposed order to incorporate adjustments that Western Digital and Toshiba Corporation, the buyer of the divested assets, made in the transaction documents. The final order provides for the additional time Western Digital required to complete the divestiture in order to obtain the necessary approvals from other relevant competition authorities. The Decision and Order also includes revised production and asset transfer schedules, and extended time in which Western Digital will have access to certain employees. The FTC has also approved changes to the Divestiture Agreement and Contract Manufacturing Agreement incorporated in the Decision and Order to reflect the changes to the remedial agreements made by Western Digital and Toshiba Corporation.

In addition, the FTC has approved modifications to the Interim Monitor Agreement to reflect modifications made by Western Digital and ING Financial Markets (ING America), the U.S. corporate entity for ING, to allow ING America to share information with its European colleagues who are monitoring the divestiture for the EC.

In a Statement, the Commission noted that it made the decision to challenge the Western Digital/HGST merger in light of the fact that HGST had been a strong, high quality, and innovative competitor in the desktop hard disk drive market, which contained only Western Digital, HGST, and Seagate/Samsung.

The Commission vote approving the modified Decision and Order, and a response to the member of the public who commented on it was 2-0, with Commissioner Maureen K. Ohlhausen not participating and Commissioner Joshua D. Wright recused.

Companies: Western Digital Corp.

News: Antitrust FederalTradeCommissionNews