The European Commission has announced its approval of the proposed take over of storage vendor SanDisk by Western Digital. The merger of the two US-based storage rivals will not adversely affect competition in Europe, the EC has ruled.

In October 2015 BCN reported 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 capacity of NAND Flash Memory products to store data in a small footprint, while simultaneously using less power but granting faster access to data, has made NAND the storage technology of choice in data centres that support cloud computing.

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 investigated 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.

“This multi-billion dollar deal can go ahead without delay,” said competition policy commissioner Margrethe Vestager.

By: DocMemory
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