The European Commission has delivered a decision that has significant consequences for parallel transactions in concentrated markets.


The commission is assessing two mergers in the hard-disk drive (HDD) sector – the Seagate/Samsung merger and the Western Digital/Hitachi merger.

The HDD sector has previously been consolidated through mergers, but these were not considered to be problematic by the commission, in particular due to the customers' relative buying power (important customers include Dell and Hewlett-Packard), low barriers to entry from neighbouring markets and limited vertical effects.

There are five players on the market: Western Digital, Hitachi (now known as Viviti Technologies), Seagate, Samsung and Toshiba, although Toshiba is not active in all segments of the HDD market. Seagate is the market leader. If both the Seagate/Samsung merger and the Western Digital/Hitachi merger were to be approved, the number of competitors on the market would be reduced from five to three (or from four to two if Toshiba is disregarded).


The Western Digital/Hitachi merger was announced on March 9 2011. On April 19 2011 the Seagate/Samsung merger was announced and also notified. The following day the Western Digital/Hitachi merger was notified. The commission's initial investigations led it to determine that both deals could raise concerns. The commission decided that, as the two mergers were notified within a very short time of each other, it had to give priority to the transaction that was notified first. Thus, the Seagate/Samsung transaction is being assessed on the assumption that Western Digital and Hitachi will remain separate competitors.

On October 3 2011 the commission issued a statement of objections in relation to the Western Digital/Hitachi deal. The parties have until November 30 2011 to conceive of, offer and agree with the commission on remedies to the competition concerns raised. The parties have submitted such remedies, but if the commission does not agree with the proposals then it is likely that the deal will be blocked or that the parties will abandon it.

Western Digital has appealed to the European Court of Justice (Case T-452/11) over the commission's decision to give review priority to the Seagate/Samsung merger.


First-mover advantage is a well-known concept in business and applies in many spheres. In competition law, the concept often means that the first merger between competitors in a particular concentrated market is allowed by the competition authorities, but subsequent mergers are likely to be blocked. In relation to the mergers in the HDD market, the challenge for the commission was to decide which entities should receive priority when two transactions were notified simultaneously, or almost simultaneously.

The commission's decision is based on the fact that the Seagate/Samsung merger was the first to be formally notified. At first, this seems reasonable. However, commentators have made a number of criticisms, all of which relate to the fact that the parties to a transaction cannot in practice dictate when they formally notify a transaction to the commission. Formal notification is considered valid only if the commission – usually relatively soon thereafter – confirms that the notification is deemed to be complete. A few years ago the commission instituted a best-practice procedure whereby parties were invited informally to submit a draft notification at least three weeks before the desired formal filing date. Parties that did not comply with this procedure faced a serious risk of their notification being declared incomplete. If a notification is declared incomplete, the parties must provide the missing information; only when it is declared complete will the timeframe start in relation to the commission's review of the merger.

Although the facts are not yet clear, it appears that Western Digital and Hitachi engaged in the pre-notification procedure. It would seem reasonable to assume that Seagate and Samsung also engaged in a pre-notification procedure because of the risk of their notification being regarded as incomplete. However, given that Seagate and Samsung announced their deal and notified the same day, it seems that they had thought ahead about the issue or were more efficient in their pre-notification procedure with the commission.

The key criticism of the decision is that while formal notification is theoretically in the hands of the parties, in practice it is in the hands of the commission. Depending on subjective factors, including the particular case team assigned to the merger, the time taken for the pre-notification procedure varies, even for very similar mergers. Commentators have suggested that the date that the commission should use as its marker for priority is the date of announcement by the parties of the transaction, since this date is entirely in the hands of the parties. However, the notion of what constitutes an announcement may be questioned, in particular as disclosure rules differ between parties that are listed on a public exchange and private companies. In addition, such a rule would assume that notification occurs within a reasonable time, but how could the commission police such a rule?

Furthermore, such a rule would create potential business risks. For example, in the context of market rumours of prospective deals, the rule could drive parties to announce transactions sooner than they would otherwise wish. Certain technical procedural issues also arise in this context. For example, how does the commission's rule relate to a transaction that is first properly notified to the EU member states, but which is subsequently referred to the commission, compared to another transaction that is first properly notified to the commission?

It is likely to be at least two years before the European Court of Justice rules on this case. During the interim, the practical outcome of the commission's decision is that the 'first come, first served' principle will be respected. Thus, companies which operate in concentrated markets and are planning a merger would be well advised to commence the pre-notification procedure with the commission before announcement and to ensure that they can announce the transaction and notify on the same day.

For further information on this topic please contact Kiran Desai at Mayer Brown International LLP by telephone (+32 2 502 5517), fax (+32 2 502 5421) or email (

This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.