EU approves Hitachi buy of IBM hard disk business

The European Commission on Monday gave the go-ahead for Japanese electronics group Hitachi Ltd. to acquire sole control of the hard-disk drive business of U.S. computer maker IBM Corp.

It was concluded that the impact of the deal on competition in the 15-member European Union does not raise serious concerns, the Commission said in a statement.

IBM of Armonk, New York, makes hard disk drives (HDDs) for all major applications including servers, desktops and mobile applications such as notebook computers. Hitachi of Tokyo manufactures HDDs only for the mobile and server segments. As a result of the transaction, Hitachi will have a leading position in HDDs for mobile applications.

HDD products are standardized and the customers are large and sophisticated buyers that purchase from multiple suppliers, the Commission said, adding that supply contracts are non-exclusive and short-term.

“All of the above result in low switching costs for customers who can and do shift quantities quickly from one supplier to another,” the EU competition authority said.

In spite of Hitachi’s grip on the HDD market for mobiles, the Commission concluded that incumbent HDD manufacturers face relatively low barriers to entry into the mobile HDD segment.