back to article Seagate, WD should put a gun to Brussels' head

What if the European Commission's competition authority finds against Seagate and Western Digital in its acquisition investigations? Could it ban their products from Europe? The EC thinks it possible that both acquisitions run the risk of reducing competition in the hard disk drive market, and that this is "likely to harm …

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  1. Manu T

    EC again.

    What did you expect. Eurocrats making blunt decisions outside their borders. Is this really anything new?

  2. Anonymous Coward
    FAIL

    "They won't though, more's the pity."

    Wow, is it Daily Mail I'm reading? So you're saying the EU should not be looking into anti-competitive developments in the marketplace? Because er... less competition is good?

  3. Turtle_Fan
    Facepalm

    Obivous case is obvious

    How can the EU prohibit them? Easy, they just have to say so.

    As for the uber-uncompetitive situation you describe it implies that the merged entity can and will afford to be shut out of the second largest market in the world. Chances of this happening are remote to non-existent.

    Now if the EU was a tiny entity accounting for 2-3% of sales then anything they declare would just be disregarded.

    It's called leverage and big market authorities use it well.

    1. Marvin the Martian

      Too much pressure.

      Poor drive makers have to both fight of nagging consumers AND sneaky competitors. Is just not fair.

      If we can reduce it to one company --- SeaToshDigital or so --- they can work much more stress-free and therefore to higher quality standards. You know it makes sense.

    2. Anonymous Coward
      Unhappy

      Re: EU meddling

      So, there's nothing that the EU can do to stop the merger, but they can prevent the merged company from selling products in the EU and, in the process, greatly reduce consumer. What anti-competitive behaviour that may harm EU consumers are the EU worried about outside of their own practices?

      For their next trick, the EU will cut off their nose to spite their face.....

      1. Anonymous Coward
        Unhappy

        Re: Re: EU meddling

        Given all the down votes, let's try again:

        - current consumer choice for HD's is currently Seagate, WD, Toshiba, Hitachi and Samsung. The mergers will reduce this to WD/Hitachi, Seagate/Samsung and Toshiba

        - HD's shipped in servers/PC's/other devices not branded as WD or Seagate are unlikely to be affected by any restrictions the EU imposes based on the comments relating to external storage devices

        - consumers are left with the choice of Toshiba HD's for upgrades... Yes this is a small market, but I'm affected so it sucks...

        I accept market consolidation has to happen as research costs for storage increase and flash products take a larger share - I don't see any benefit from the EU trying to further reduce consumer choice in the hope that they may shape the rest of the world's market place.

        1. Tom 13

          You'll get that here on El Reg.

          There are some decent posters and thinkers here, but there's also a gaggle of socialists who deny they've sold their birthright for a pot of porridge but have provably done so. Speaking the truth to them only makes them angry - sort of the same way Obama gets angry when even democrats vote against his legislative proposals.

    3. Anonymous Coward
      Anonymous Coward

      Not just second largest market

      All of the world actually.

      PC manufacturers do not like having to deal with more than one drive maker at a time. So if HP, Dell or Lenovo are given the choice of "use X everywhere but Europe" or use Y everywhere they will chose Y even if the quality is lower because having two manufacturers for the same model lineup (or two model lineups) costs more in terms of logistics than the increased cost of "slightly inferior drives".

      A company in the IT sphere which has been prohibited from selling products in Europe can more or less kiss its future goodbye. That is why they are happy to pay 1Bn+ fines, but continue.

      As far as the mergers - I all for banning them. The monopolies in making manufacturing equipment are more than enough (check how many actually make the key parts of the manufacturing lines) and the monopoly of supply for key materials (hello rear earths and China) are enough thank you. We do not need a monopoly in the drives themselves to top that up.

    4. Nigel 11

      USA's been doing it for years

      The USA's been claiming jurisdiction outside its borders for years. For example, it put EU online betting companies ouut of a large chunk of business, by making *them* liable if any USA citizen managed to open an account with them. Even though the company, its servers, its bankers and investors were outside the USA, even though the punter claimed not to be a USA citizen. The companies caved in mostly because their directors would be arrested and face *criminal* prosecution if they ever set foot on USA-controlled soil again.

      1. Tom 13

        Seems fair to me,

        as long as the legal actions only occur when the people actually occupy the relevant sovereign soil.

      2. Tom 13

        So it's completely my imagination

        that I've seen IBM PCs shipped direct from the factory with two different drives in them eh? And that Packard-Bell didn't make a stadium full of PC equipment from disparate pieces while always using the same model to refer to the system?

        Nope you're as clueless about manufacturing efficiencies as you are about whether or not mergers increase monopolies. Only governments can create monopolies, it's just that the way they sell monopolies to the masses makes the masses think they are a good idea.

        1. gratou
          Thumb Down

          Only govts can create monopolies?

          You look like the clueless one now, Tom.

          For example, last time I looked, the power lines and the phone lines here belong to a private monopoly that will never be challenged because the cash outlay to do so is too great.

          Same for my city's airport, etc. You can't have two sets of wires running down a street, the return on the 2nd set will never cover the huge cost.

          As for private companies doing a better job just because "the market knows best" look at the british railways and weep.

  4. Danny 14 Silver badge
    Stop

    not really

    they would do what most other companies do. create a "shell" umbrella company and sell from those.

  5. LPF

    Hey chris ....

    Well if the two US companies can't sell in the EU, how soon do you think it will take the far east competition to step into the breach?? where there's money theres a way!

    Let me guess your american? ;)

  6. This post has been deleted by a moderator

  7. BristolBachelor Gold badge
    FAIL

    Stupid or deliberately obtuse?

    So do you really think that the shareholders will allow a merger that means neither comapny can now sell into the European market? You think that they will merge and loose a HUGE number of customers? Well if they did that, yes Europeans would loose out. The point is that their shareholders would not allow that to happen.

    The power that the EU market has is that they can prohibit companies that do bad things from selling to the market. That power means that companies will play by the rules (or pretend to). It doesn't matter where the company is registered. The power that the EU has is to prevent them doing business here, and it is up to the company to decide it they want to or not.

    By the way, it has just been announced that Orange, O2 and Vodafone are merging. They have decided that they will now charge £100 per megabyte for data and £2 per minute for all mobile calls. Glad that you don't mind.

    1. Tom 13

      Nope the deliberately obtuse are the ones who think protectionism

      under any guise works. Monopolies fail unless governments enforce them. In your example if all three companies merged and charged the specified prices, a new firm, let's call it Palin's Mobile Phone Service would incorporate and sell mobile phone service. They would do so because they could charge half the specified rates and still be rolling in the money. O-O-V would loose their customers and either reduce their rates to match Palin or go out of business. If they were obstinate enough to go out of business, you could make a tidy profit shorting their stock.

  8. Paolo Marini
    FAIL

    give an informed comment

    There is cooperation between the two blocs in terms of discussing big mergers and there are previous examples in both directions, so before criticising and laughing at the EU, make yourself informed: http://ec.europa.eu/competition/mergers/legislation/eu_us.pdf

  9. Anonymous Coward
    WTF?

    Lets see..

    I thank the EU to stop large American mega-companies shitting on us.

    So no need to meddle with Intel, MS then?

    Lets see how well they do with a drop of sereral million sales / year.

    And POT/ BLACK time again.

    Of course the Americans never get involved in other countries issues when it comes to sales, after all we are all free to trade with Cuba, Iran, North Korea without ANY pressure from the US.

  10. Paolo Marini

    to add to the shame

    Due to differences in domestic legislation, the EU and US deal with these

    notifications differently. The Commission notes differences in notification procedures

    that arise from EU and US domestic legislation and summarizes the EU-US notification

    process as follows:

    on receipt of a notification [from the merging firms], the Commission

    publishes a notice of the fact of the notification [from the merging firms] in

    the Official Journal. Thus the proposed merger is made public at the outset

    and all mergers meeting the criteria for notification to the US are notified,

    even where, on subsequent examination, they do not raise competitive

    concerns. The corresponding US legislation9 requires that the fact of a

    merger filing, as well as its content, remain confidential. Thus the US

    authorities notify the Commission only when, after a preliminary

    examination, they decide to open an investigation into the proposed merger

    (1996, 3.1).

  11. TuckerJJ
    Stop

    Meh

    "It strikes me that both Seagate and WD could go to the EU's head competition bureaucrat, Commission VP Joaquín Almunia, and hold a gun to his head by saying: "Prohibit our acquisitions if you want, but it's your EU citizens and businesses that will suffer." "

    If they really are in a position to pull this kind of behaviour then there's already too little competition in the market and the EC is right to put it's foot down now rather then just let matters get worse.

  12. Anonymous Coward
    Thumb Down

    Duh?

    Who is this git?

  13. Gordon 10 Silver badge

    Is this a troll?

    For shame Register. Whilst I enjoy contrary OpEd pieces as much as the next reader I actually expect some intelligence and less wilful obtuseness.

    Very dumb article.

  14. Nigel 11
    Black Helicopters

    Conspiracy theory

    Agreed, the EU has no power to do anything about HDD manufacture.

    UNLESS ... might they be setting the scene for creating an EU manufacturer of storage devices with EU or State start-up funding? They did that for Airbus, because the USA had obtained a two-company monopoly. Hope they realize that HDD manufacture will be a declining niche for decades to come, and that SSDs are the shape of the future, at least up to 250GB or so.

    Just a thought.

  15. Sarah Davis
    Coat

    Thank ... (insert favoured fictional deity)

    monopolies are never a good thing. With Seagate & WD competing against each other we get better deals, and the tech is advanced at a good pace. If they merge, say goodbye to good deals and watch how tech advances slow. - it's a good thing that the EU reins in these large corps

  16. Destroy All Monsters Silver badge
    Mushroom

    Wow! Where are the retarded statists coming from all of a sudden?

    Yep, big EU *please* protect me from those evil merging companies.

    It's ridiculous. Enjoy your super-expensive, overtaxed, EU-allowed and, if worst comes to worst, french-company-sourced harddisks.

    Anyone who is old enough to know what a "regulated telecoms market in data terminals" looks like knows what I mean.

  17. tekgun

    Problem is...

    Both Samsung and Hitachi want out of the HDD market, WD and Seagate are not forcing them to sell up, so what are the EU going to do exactly?

    They can't make a company continue something it doesn't want to do, even if they stop the mergers who's to say another company is going to be interested in buying, Samsung was apparently working at a loss in the HDD sector as it is.

    Perhaps the EU should force some random company to start making graphics cards because of the lack of competitiveness in that market as well!

    1. calagan

      Samsung and Hitachi want out - With good reasons

      The technology is obsolete and the market is nearly ready for flash-based only storage (where there is still a good deal of competition),

      It just need this nice little boost from the EU.

      1. BristolBachelor Gold badge
        FAIL

        Re: Calagan

        I have sent you £232 (4x £58) for you to supply me with 4x 2TB FLASH disks to put in my new NAS. The address to send them to is with the cheque.

        How much they cost you, and where you manage to buy them from is not my problem; you seem to know of a source who have a flash equivalent to harddisks that I do not know about.

    2. This post has been deleted by a moderator

      1. alwarming
        Trollface

        Are you suggesting...

        ... that one should give up luxuries of my first 40 years in return for comfort in last 40 ?

        Interesting point.

      2. system

        RE: @ Destroy All Monsters

        "some years down the road", that'd be a privately owned toll road, right?

  18. the spectacularly refined chap

    Just so I understand this correctly...

    ..the argument is that the EU should _not_ investigate the anti-competitive effects of an acquisition precisely _because_ that acquisition, if approved, would give that entity disproportionate power in the marketplace?

    That doesn't follow from the premises, quite the reverse. The argument this article makes does not even make sense.

  19. Ken Hagan Gold badge
    Facepalm

    You cannot be serious

    The suggestion is that the EU should attempt to prohibit a business transaction between non-European companies, taking place outside its jurisdiction, in an industry that has no European player, and that (lacking any legal remedies) it should risk starting a trade war in order to do so.

    Where's the John McEnroe icon?

    1. BristolBachelor Gold badge

      Business transactions

      I'm sorry, but where does it say that the EU is trying to stop any business transactions between non-European companies?

      I read this as a warning that if these companies go down this path, then there is a risk that the EU may attempt to prohibit transactions between the new non-European company, and Europeans (because it would be to the detriment of those Europeans, and that the EU remit is to help those Europeans).

      As it happens, I doubt that anything will come of it. We will end up with only 1 OS supplier, we will have to buy our OS from them, and each year it will become more expensive and seem to get worse (oh sorry I mean't to say Harddisks).

      1. Destroy All Monsters Silver badge
        Linux

        Which is why..

        ...we don't actually have *one* OS supplier.

        Never had.

      2. Tom 13

        And that one OS supplier is in a monoploy position precisely BECAUSE

        of a GOVERNMENT issued monopoly license, not because of any mergers. MS has always been MS- they didn't merge with Dr. DOS who had 35% of the OS market to make a company with a combined 75% of the OS market, they always had 95% of the desktop OS market. Oh, the government monopoly license is called "copyright" which seems to make most people think it is an intrinsically GoodThing (tm).

  20. Ken Hagan Gold badge

    Re: Business transactions

    "I read this as a warning that if these companies go down this path, then there is a risk that the EU may attempt to prohibit transactions between the new non-European company, and Europeans"

    The WTO might have an opinion on that. It is one thing to say "you have to play by our rules when you trade in our jurisdiction". It is quite another to say "we have a rule that you aren't allowed to be Seagate". The former is concerned with what you do. The latter is concerned with who you are.

  21. scrubber
    WTF?

    It's none of their f**king business

    When the EU start getting involved in M&A outside their borders it's time to rein them in.

    Sure, the mergers will lead to decreased competition within the EU but if that's the problem then incentivise production within the EU. If people within the EU wish to buy goods from outside the EU then it is none of the EU bureaucrat's business the size of the supplier or the number or extra-EU competitors there are.

    It's a global business and if any company is making super-normal profits it will encourage others to enter the market. The truth is it is not a hugely profitable market and if the acquisitions are not allowed to go through the (largest) loss makers may simply exit the market anyway.

  22. blind_clegg

    The EU won't ban the merger

    ... they'll just fine the resultant company 10 times the estimated cost to EU citizens and businesses.

    And a good thing too.

    1. Destroy All Monsters Silver badge
      Thumb Down

      Brain fell out or something?

      So what _is_ the "estimated cost to EU citizens and businesses"? Less taxes, of course.

  23. Alan Brown Silver badge

    spinning media

    Is amalgamating because it has to in order to survive.

    In 2-3 years time the mass storage market will be dominated by silicon. It's already happening at the bottom and top ends.

    SeaCrate and WonkyDigital can't afford to stop EU sales - and doing so would simply accelrate the move to non-rotating storage.

    1. Is it me?

      Well spotted

      Spinning Iron is on the way out, thus the number of volume manufacturers you can continue to support will drop. In fact a duopoly will be fine, and mean that the prices will remain lower for longer.

      Both companies need to compete not only with each other for spinning iron, but also with all the SDD manufacturers, and at the PC level, just how many 1TB drives do you really need until Windows 9 comes along and needs it all on it's lonesome.

      PS my Air does just fine with 128Gb, you only need bigger storage for multi-media, not a problem in the corporate market. Even domestically a home NAS can deal with that for the family's PCs, don't need to have it all locally.

  24. Joe User
    Coat

    Cue the hard drive smugglers

    Is that a hard drive in your pocket, or are you just happy to see me?

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