European Commission - Press release
Brussels, 29 February 2016
The European Commission has approved the acquisition of data storage and software provider EMC by computer technology company Dell, both of the US, under the EU Merger Regulation.
Commissioner Margrethe Vestager, in charge of competition policy, stated: "Given the strategic importance of the data storage sector, I am pleased that we have been able to approve Dell's multi-billion dollar takeover of EMC within a short space of time while making sure that there would be no adverse effects on customers. I appreciate the close cooperation we have enjoyed with our US counterparts at the Federal Trade Commission."
Dell and EMC both provide data storage systems, and in particular external enterprise storage systems.
Dell is also active in servers based on x86 architecture. VMware, a company controlled by EMC, is a supplier of virtualization software that can be used in conjunction with these types of servers and storage products.
The Commission's investigation
The Commission assessed the effects of the transaction on the market for external enterprise storage systems. The Commission also investigated the risk that the merged entity could attempt to restrict or degrade access to VMware's software for competing hardware vendors.
External enterprise storage systems
The Commission found that the merged entity has a moderate market share in the market for external enterprise storage systems and in any event the increment brought about by the merger is small.
The Commission found that the merged entity will continue to face strong competition from established players, such as Hitachi, HP, IBM and NetApp, as well as from new entrants.
VMware has a strong market position in server virtualization software. Nevertheless, the Commission found, on the basis of available evidence, that the merged entity would have neither the ability nor the incentive to shut out competitors given that:
* VMware's products are facing increasing competition from other providers of server virtualization software such as Citrix, Microsoft and Red Hat and, and to a lesser extent from new technologies;
* customers typically multi-source from more than one server virtualization software provider;
* VMware's business strategy has been hardware and software-neutral and it has been working with a large number of vendors; and
* in the server market Dell has strong competitors that will continue to operate either in partnership with VMware or with third party virtualisation software providers.
The Commission also concluded that the combination of Dell's and EMC's external enterprise storage systems products, as well as VMware's storage virtualization software, would have no negative impact on competition given the existence of several alternatives to VMware’s software.
Finally, the Commission assessed whether the merged entity could shut out competitors from access to virtualization software used for converged and hyper-converged infrastructure systems. The Commission concluded that the acquisition raised no concerns in this respect, since competitors to the merged entity would be able to provide these systems in partnership with virtualization software providers other than VMware.
The Commission cooperated closely with the US Federal Trade Commission during its investigation.
Companies and products
Dell, a US based company owned by Denali, develops, sells and supports computers and related products and services, including servers, networking products, storage systems, software, IT and business services.
EMC, a US based company, offers data storage, information security, virtualization, analytics, cloud computing and other products and services that enable businesses to store, manage, protect and analyse data. EMC is a majority owner of VMware, Inc., a provider of virtualization software, and VCE Company LLC, a joint venture with Cisco that sells converged infrastructure appliances.
The storage resources of a company's IT infrastructure allow for information to be saved (hard disk drive or flash drive), retained and retrieved (i.e. read).
Servers are the computing power of the data centre, and can be used in many ways; large companies usually have a single function per server, for example file servers, printer servers or web servers.
Virtualization software is a layer of software which creates virtual versions of computer resources, like computer hardware, operating systems, storage devices, or network resources.
Converged infrastructure systems refer to pre-packaged IT stacks (comprising a server, storage devices, networking equipment and supporting software including virtualization software) which can be bought from a single vendor with post-sales support.
Hyper-converged infrastructure systems are physically integrated systems combining a commodity server and virtualization software allowing the server to present itself as a single system that has both computing and storage capabilities.
Merger rules and procedures
The Commission has the duty to assess mergers and acquisitions involving companies with a turnover above certain thresholds (see Article 1 of the Merger Regulation) and to prevent concentrations that would significantly impede effective competition in the EEA or any substantial part of it.
The vast majority of notified mergers do not pose competition problems and are cleared after a routine review. From the moment a transaction is notified, the Commission generally has a total of 25 working days to decide whether to grant approval (Phase I) or to start an in-depth investigation (Phase II).
Source: Europa.eu (Copyright European Commission)