The European Commission has approved the acquisition of storage and software giant EMC by PC and server maker Dell.
In a statement Commissioner Margrethe Vestager declared that the deal meets the criteria of the EU’s Merger Regulation. The strategic importance of the data storage sector meant that the EC was able to approve Dell’s multi-billion dollar takeover of EMC within a short space of time, according to Vestager, who thanked the Federal Trade Commission for close cooperation.
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 access to VMware’s software for competing hardware vendors. The Commission is convinced there will be no adverse effects on customers, according to Vestager.
The Commission found that the merged entity has a moderate market share in the market for external enterprise storage systems and the increment brought about by the merger is small. The new Dell/EMC entity will continue to face strong competition from established players, such as Hitachi, HP, IBM and NetApp, as well as from new entrants, it said.
Despite VMware’s ‘strong market position’ in server virtualization software, the available evidence led the EC investigators to conclude that the merged entity would have neither the ability nor the incentive to shut out competitors. The likes of Citrix, Microsoft and Red Hat can give it plenty of competition in the server virtualisation market, the EC has judged, and it predicted that the EMC/Dell hybrid won’t have things its own way in new technology markets.
Since customers typically multi-source from more than one server virtualization software provider and VMware’s approach has traditionally been hardware and software-neutral, it offers work opportunities to a large number of vendors. Equally, 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 combination of Dell’s and EMC’s external enterprise storage systems products won’t have an impact on competition given the number of alternatives to VMware’s software.
The Commission also asked whether the merged entity could shut competitors out from the virtualization software used for converged and hyper-converged infrastructure systems. Here it also found there were no concerns raised. The merger, when first reported in BCN in October 2015, was valued at $60 billion.