The alternative would have been for the Commission to open a
four month investigation in to the merger. Such an investigation
resulted in the Commission blocking General Electric’s $45 billion
acquisition of Honeywell last year. A significant factor in the
HP-Compaq decision is believed to be the absence of any significant
objection from rivals such as Dell, IBM and Sun.
The Commission's analysis focused on the combination of HP's and
Compaq's activities in the markets for PCs, servers, PDAs, storage
solutions and services. In addition, the Commission also assessed
the impact of the merger on HP's joint development of the Itanium
processor with Intel as well as the importance of HP's increased
opportunity for joint sales of PCs and printers following the
integration of Compaq's PC products.
With regard to PCs, the Commission concluded that the merged
entity will continue to face strong competition in Europe from
rivals IBM, Dell and Fujitsu-Siemens, which together with the
absence of significant barriers to entry and the practice of
non-exclusive contractual relationships between retailers and
manufacturers would prevent the new HP from any attempt to raise
prices significantly.
As to the potential impact of HP and Intel's jointly developed
Itanium processor, the Commission concluded that it was in HP and
Intel's interests to guarantee unrestricted access by
competitors.
