CHINA said Western Digital Corp must address concerns that its proposed acquisition of Hitachi Ltd's storage business will hurt competition before regulators approve the purchase.

Western Digital's acquisition will hurt competition in the market for computer hard-disk drives "to a certain extent," Shang Ming, head of the Ministry of Commerce's antimonopoly bureau, said in Beijing yesterday. The ministry will seek "appropriate solutions" to address its concerns, he said.

"China is the world's biggest computer consumer and so naturally the deal will exert a negative impact on Chinese consumers," Shang said at a briefing held to review the bureau's activity in 2011.

The importance of Chinese approval for acquisitions has increased as economic growth averaging 10 percent in the past three decades transformed the nation into the world's biggest consumer of products including computers, automobiles, and mobile phones.

The ministry said it received 43 percent more antitrust review applications from January to mid-December of this year than it did in 2010.

The ministry is also reviewing Google Inc's acquisition of Motorola Mobility Holdings, Shang said.

Western Digital won European Union approval for its purchase of Hitach's unit last month after agreeing to sell off some disk-drive production. The sale of "essential production assets" for 3.5-inch hard disk drives eliminates concerns that Western Digital would only face Seagate Technology Plc as a rival supplier, the European Commission said.

Seagate won EU approval to buy Samsung Electronics Co's computer hard-disk drive operations in October. That purchase, combined with Western Digital's proposed acquisition, would cut the number of large makers of mechanical hard-disk drives for computers to three from five. Western Digital would have a 50 percent share of the market, Seagate 40 percent and Toshiba 10 percent, according to research by IHS Inc's iSuppli.

China approved Seagate's acquisition earlier this month after the ministry and the firms agreed to protect competition, Shang said.
 

Source:shanghaidaily