The European Commission is to investigate the proposed merger between Seagate and Samsung, together with Western Digital's plan to buy out Hitachi, amid concerns that both transactions may significantly change the landscape of the hard disk drive (HDD) market.
Seagate's purchase of Samsung's HDD division would consolidate its position as the leader in the HDD market and could lead to competition concerns.
"[The] merged entity would have a significant market share in the overall market for HDDs, particularly in 3.5in desktop HDDs where it would only face two competitors (Western Digital and Hitachi)," the European Commission noted in a statement.
"This could impact negatively on customers' ability to obtain competitive prices for the product, [and] the merger could also reduce the manufacturers' incentives to innovate in the market."
Any potential tie up between Seagate and Samsung could also have a negative impact on the creation of HDD 'head' components and on the external storage devices market.
Samsung currently sources heads for HDDs from TDK, the only independent heads supplier.
"[The merger] might lead to a significant reduction in the demand for heads - a crucial component of HDDs - [and] could in turn result in uncompetitive prices for heads and a weakening of TDK's ability to keep innovating."
Furthermore, the EC argued that Toshiba's competitiveness in the HDD market could be negatively affected as the manufacturer depends on TDK heads.
As Samsung is an important supplier of HDDs to non-integrated external storage devices (ESDs), a combined Seagate/Samsung entity could also negatively affect competition and innovation in the ESD market.
Seagate and Samsung could boost their own branded ESDs by increasing HDD prices or restricting supply to non-integrated ESD providers, the EC noted.
V3.co.uk contacted the manufacturers for comment, but they had not responded at the time of writing.
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