Proposed Acquisition of the Sole Control by Western Digital Corporation of SanDisk Corporation

Notifying Parties

Western Digital Corporation and SanDisk Corporation

Notifying Date

4 December 2015

Summary of Transaction

(i)                 The names of the merger parties:

Purchaser : Western Digital Corporation (“WDC”)

Target: SanDisk Corporation (“SanDisk”)

(ii)               A description of the transaction:

This is a joint notification made by WDC and SanDisk in relation to WDC’s proposed acquisition of 100% of the common stock in and control of in SanDisk (“the Proposed Acquisition”).

(iii)             A description of the business activities of the merger parties worldwide and in Singapore;

WDC develops and manufactures storage solutions for the creation, management and preservation of digital content. They produce hard disk drives (“HDDs”) for a numbers of uses including personal computers, consumer electronics, cloud computing and datacentre applications, and enterprise class solid state drives (“Enterprise SSDs”), and hybrid drives. WDC also produces certain external and business storage solutions.

SanDisk is a digital storage producer that specialises in flash memory solutions. They produce flash storage solutions, including Enterprise SSDs and SSDs for consumer-operated devices, removable cards, USB flash drives and embedded flash products for mobile and connected applications and consumer electronics. SanDisk is active in software, including storage, including storage solution software that is used in its consumer products. SanDisk further produces flash storage solutions, including SSDs, for enterprise datacentres and client computing platforms.

In Singapore, WDC’s activities are media manufacturing, R&D and sales. SanDisk’s activities in Singapore consist of a sales office.

(iv)              A description of the overlapping goods or services, including brand names;

WDC and SanDisk overlap globally in the supply of Enterprise SSDs.

(v)                A description of substitute goods or services;

WDC and SanDisk consider that the relevant product market includes, at least, Enterprise SSDs and NAND-based all flash arrays.

(vi)              the applicant’s views on:

a.       definition of the relevant market(s);

b.      the way in which competition functions in this market;

c.       barriers to entry and countervailing buyer power; and

d.      the competitive effects of the merger (non-coordinated, coordinated and/or vertical effects, as relevant).

WDC and SanDisk submit that the relevant product market is that for the supply of Enterprise SSDs globally.

The Parties take the view that the Proposed Acquisition, when carried into effect, will not lead to a substantial lessening of competition, whether in Singapore or globally, for the following reasons:

(a)                the modest combined shares of the Parties and lack of market power post-Acquisition;

(b)               the lowered barriers to entry for undertakings with existing manufacturing and sales arrangements, firmware and facilities as well as the ease with which infrastructure and development costs can be recovered;

(c)                the absence of significant barriers to entry in terms of intellectual property rights and regulatory restrictions;

(d)               the significant number of strong, well-rounded competitors that will ensure effective competition post-Acquisition;

(e)               the existence of strong countervailing buyer power given that a limited number of OEM customers account for a significant proportion of the demand for Enterprise SSDs and hyperscale customers;

(f)                 the competitive constraints from customers who are capable of producing PCIe Enterprise SSDs for their own use;

(g)                the constraints imposed by new memory technologies;

(h)               the inability of Parties and competitors to align their behaviour in the market due to lack of price transparency, asymmetrical market positions and importance of innovation; and

(i)                  the lack of incentive to and unsustainability of maintaining coordinated behaviour in the relevant market.
 

 Decision

The proposed merger, if carried into effect, will not infringe the section 54 prohibition.

 Decision date

19 January 2016

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