HP/COMPAQ: ACCC to scrutinise deal

HP/COMPAQ: ACCC to scrutinise deal

The Australian Competition and Consumer Commission (ACCC) will investigate the ramifications of Hewlett-Packard's proposed acquisition of Compaq Computer on the Australian market.

ACCC spokesperson Lin Enright confirmed the commission will spend several weeks looking at how the merger might effect the domestic IT market. "We will have a preliminary look at it and see if any further investigations are necessary," she said.

Enright said complex mergers can take the ACCC several months to investigate, but expects the commission's investigation into Hewlett-Packard's acquisition of Compaq need not take more than a few weeks.

Regulatory officials at the European Commission (EU) have also announced it will investigate whether the merger meets its criteria for maintaining market competition. It is also expected that this same process will take place in the United States, through either of the Justice Department or the Federal Trade Commission.

"It's too big of a merger for them [the Justice Department] to simply give it an automatic pass," predicted Robert Litan, a former deputy assistant attorney general in the US Department of Justice's antitrust division who is now at Brookings Institution in Washington. "They are going to have to take a deeper look at this."

Litan said the main issue for regulators will be deciding how to slice and dice products by market - for example, Intel-based vs. Unix-based servers or low-end vs. high-end servers - and then determining whether the merger creates a dominance in any of these markets.

"The key test is a test of dominance - whether or not a deal creates a dominant position," said Amelia Torres, a spokeswoman for the European Commission in Brussels. Because of the size of the merger, it faces automatic EC review under its guidelines.

When asked about any antitrust issues brought on by the merger, HP chief executive officer Carly Fiorina said officials have been looking into those issues for weeks. She said the companies would cooperate with an expected antitrust probe by the European Union.

"We intend to be very cooperative with the EU," she said. "We intend to make sure this [merger] is pro-competition and pro-customer." Fiorina said the companies have not yet had any discussions with regulators, either in Europe or the US.

"Until we have full regulatory approval [both companies] must continue to compete as competitors in the marketplace," Fiorina said.

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