On 2nd March of 2012, MOFCOM publicized another conditional clearance on concentration in the hard disk industry, which comes three months after MOFCOM imposed similar conditions on Seagate’s acquisition of Samsung’s hard drive business. At this time, the concentration parties are Western Digital’s and Viviti Technologies, and the relevant market is defined by MOFCOM as the worldwide market for hard disk drive.
In process of appraising effects out of concerning concentration, MOFCOM took the following factors into account: competitive situation of the relevant market, purchase model, capacity utility, product innovation, bargaining power from the buyer side, market entry, and effects on consumers and the relevant product market, by analysis of which MOFCOM reached the conclusion that Western Digital’s/Viviti concentration probably will create the effect of eliminating and restricting competition in the market for hard disk drive in China.
Through several rounds of negotiation with the concentration parties, MOFCOM accepted the divestiture that had been imposed, as EU and U.S competition authorities did, and meanwhile additional remedies are imposed as well:
1. Maintain Viviti as an independent competitor and independently operating business;
2. Viviti is required to continue to market hard disk drive independently by using the original team, under the same brands as before;
3. A firewall need to be set up between the parties for the purpose of preventing the exchange of information;
4. Both parties are required to conduct R&D activities as before;
5. A trustee needs to be appointed for supervising the implementation of all obligations under the conditional clearance
What’s worth noting for enterprises is that , the whole process from submitting filing documents at the first time to obtain the final decision from MOFCOM lasts around 11 months long, which is even longer than the 7 months in the Seagate/ Samsung transaction.