EC to investigate HP-Compaq merger

The European Commission is to investigate HP's planned $25bn (£17.3bn) takeover of Compaq, a union that is likely to see HP...

The European Commission is to investigate HP's planned $25bn (£17.3bn) takeover of Compaq, a union that is likely to see HP shedding 13,000 jobs worldwide.

Amelia Torres, an EC spokeswoman on competition matters, said: "If the deal meets the sales thresholds set forth in the European Union competition regulations, then it will be examined by the Commission."

An investigation by the Commission, the executive body of the European Union, is standard procedure in mergers of this scale. All acquisitions in the EU where the revenue of the combined company exceeds $4.5bn and where each individual company has revenue of at least £153m are investigated.

The merged company would account for $87bn in revenue, making it one of the world's largest IT companies. Details of the acquisition have to be reported to the commission within seven days of the signing of any takeover agreement. A standard investigation starts immediately after the merger is reported and lasts a month. The Commission then either gives the green light for the deal or launches an in-depth investigation, Torres said.

With a 25.8% combined market share, HP and Compaq will hold a firm number one position in Europe, the Middle East and Asia. Compaq, in the second quarter, had 17.4% of the market, followed by Dell with 10.1% and HP with 8.4%.

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