Federal Register / Vol. 77, No. 48 / Monday, March 12, 2012 / Notices 14523 

1 In particular, the written request for confidential 

treatment that accompanies the comment must 

include the factual and legal basis for the request, 

and must identify the specific portions of the 

comment to be withheld from the public record. See 

FTC Rule 4.9(c), 16 CFR 4.9(c). 

FEDERAL TRADE COMMISSION 

[File No. 111 0122] 

Western Digital Corporation; Analysis 

of Agreement Containing Consent 

Order to Aid Public Comment 

AGENCY: Federal Trade Commission. 

ACTION: Proposed consent agreement. 

SUMMARY: The consent agreement in this 

matter settles alleged violations of 

federal law prohibiting unfair or 

deceptive acts or practices or unfair 

methods of competition. The attached 

Analysis to Aid Public Comment 

describes both the allegations in the 

draft complaint and the terms of the 

consent order—embodied in the consent 

agreement—that would settle these 

allegations. 

DATES: Comments must be received on 

or before April 4, 2012. 

ADDRESSES: Interested parties may file a 

comment online or on paper, by 

following the instructions in the 

Request for Comment part of the 

SUPPLEMENTARY INFORMATION section 

below. Write ‘‘Western Digital, File No. 

111 0122’’ on your comment, and file 

your comment online at https:// 

ftcpublic.commentworks.com/ftc/ 

westerndigitalhitachiconsent, by 

following the instructions on the Webbased form. If you prefer to file your 

comment on paper, mail or deliver your 

comment to the following address: 

Federal Trade Commission, Office of the 

Secretary, Room H–113 (Annex D), 600 

Pennsylvania Avenue NW., Washington, 

DC 20580. 

FOR FURTHER INFORMATION CONTACT: 

Benjamin Gris (202–326–3468), FTC, 

Bureau of Competition, 600 

Pennsylvania Avenue NW., Washington, 

DC 20580. 

SUPPLEMENTARY INFORMATION: Pursuant 

to section 6(f) of the Federal Trade 

Commission Act, 38 Stat. 721, 15 U.S.C. 

46(f), and § 2.34 the Commission Rules 

of Practice, 16 CFR 2.34, notice is 

hereby given that the above-captioned 

consent agreement containing a consent 

order to cease and desist, having been 

filed with and accepted, subject to final 

approval, by the Commission, has been 

placed on the public record for a period 

of thirty (30) days. The following 

Analysis to Aid Public Comment 

describes the terms of the consent 

agreement, and the allegations in the 

complaint. An electronic copy of the 

full text of the consent agreement 

package can be obtained from the FTC 

Home Page (for March 5, 2012), on the 

World Wide Web, at http://www.ftc.gov/ 

os/actions.shtm. A paper copy can be 

obtained from the FTC Public Reference 

Room, Room 130–H, 600 Pennsylvania 

Avenue NW., Washington, DC 20580, 

either in person or by calling (202) 326– 

2222. 

You can file a comment online or on 

paper. For the Commission to consider 

your comment, we must receive it on or 

before April 4, 2012. Write ‘‘Western 

Digital, File No. 111 0122’’ on your 

comment. Your comment—including 

your name and your state—will be 

placed on the public record of this 

proceeding, including, to the extent 

practicable, on the public Commission 

Web site, at http://www.ftc.gov/os/ 

publiccomments.shtm. As a matter of 

discretion, the Commission tries to 

remove individuals’ home contact 

information from comments before 

placing them on the Commission Web 

site. 

Because your comment will be made 

public, you are solely responsible for 

making sure that your comment does 

not include any sensitive personal 

information, like anyone’s Social 

Security number, date of birth, driver’s 

license number or other state 

identification number or foreign country 

equivalent, passport number, financial 

account number, or credit or debit card 

number. You are also solely responsible 

for making sure that your comment does 

not include any sensitive health 

information, like medical records or 

other individually identifiable health 

information. In addition, do not include 

any ‘‘[t]rade secret or any commercial or 

financial information which is obtained 

from any person and which is privileged 

or confidential,’’ as provided in Section 

6(f) of the FTC Act, 15 U.S.C. 46(f), and 

FTC Rule 4.10(a)(2), 16 CFR 4.10(a)(2). 

In particular, do not include 

competitively sensitive information 

such as costs, sales statistics, 

inventories, formulas, patterns, devices, 

manufacturing processes, or customer 

names. 

If you want the Commission to give 

your comment confidential treatment, 

you must file it in paper form, with a 

request for confidential treatment, and 

you have to follow the procedure 

explained in FTC Rule 4.9(c), 16 CFR 

4.9(c).1 Your comment will be kept 

confidential only if the FTC General 

Counsel, in his or her sole discretion, 

grants your request in accordance with 

the law and the public interest. 

Postal mail addressed to the 

Commission is subject to delay due to 

heightened security screening. As a 

result, we encourage you to submit your 

comments online. To make sure that the 

Commission considers your online 

comment, you must file it at https:// 

ftcpublic.commentworks.com/ftc/ 

westerndigitalhitachiconsent by 

following the instructions on the webbased form. If this Notice appears at 

http://www.regulations.gov/#!home, you 

also may file a comment through that 

Web site. 

If you file your comment on paper, 

write ‘‘Western Digital, File No. 111 

0122’’ on your comment and on the 

envelope, and mail or deliver it to the 

following address: Federal Trade 

Commission, Office of the Secretary, 

Room H–113 (Annex D), 600 

Pennsylvania Avenue NW., Washington, 

DC 20580. If possible, submit your 

paper comment to the Commission by 

courier or overnight service. 

Visit the Commission Web site at 

http://www.ftc.gov to read this Notice 

and the news release describing it. The 

FTC Act and other laws that the 

Commission administers permit the 

collection of public comments to 

consider and use in this proceeding as 

appropriate. The Commission will 

consider all timely and responsive 

public comments that it receives on or 

before April 4, 2012. You can find more 

information, including routine uses 

permitted by the Privacy Act, in the 

Commission’s privacy policy, at http:// 

www.ftc.gov/ftc/privacy.htm. 

Analysis of Agreement Containing 

Consent Order to Aid Public Comment 

I. Introduction 

The Federal Trade Commission 

(‘‘Commission’’) has accepted from 

Western Digital Corporation (‘‘Western 

Digital’’), subject to final approval, an 

Agreement Containing Consent Order 

(‘‘Consent Agreement’’), designed to 

remedy the likely anticompetitive 

effects resulting from Western Digital’s 

proposed acquisition of Viviti 

Technologies Ltd., formerly known as 

Hitachi Global Storage Technologies 

Ltd. (‘‘HGST’’), a wholly-owned 

subsidiary of Hitachi, Ltd. (‘‘Hitachi’’) 

Pursuant to an agreement dated 

March 7, 2011, Western Digital intends 

to acquire HGST from Hitachi for 

approximately $4.5 billion in cash and 

Western Digital stock. The proposed 

merger would result in a merger to 

duopoly in the market for 3.5 inch hard 

disk drives used in desktop computers 

(‘‘desktop HDDs’’). The Commission’s 

Complaint alleges that the proposed 

Acquisition, if consummated, would 

violate Section 7 of the Clayton Act, as 

amended, 15 U.S.C. 18, and Section 5 of 

the Federal Trade Commission Act, as 


pmangrum on DSK3VPTVN1PROD with NOTICES
14524 Federal Register / Vol. 77, No. 48 / Monday, March 12, 2012 / Notices 

amended, 15 U.S.C. 45, by lessening 

competition in the market for desktop 

HDDs. 

The Consent Agreement remedies the 

alleged violation by replacing the lost 

competition in the desktop HDD market 

that would result from the proposed 

acquisition. Under the terms of the 

Consent Agreement, Western Digital 

will divest to Toshiba Corporation 

(‘‘Toshiba’’) all of the assets relating to 

the manufacture and sale of desktop 

HDDs necessary to replicate HGST’s 

position in the desktop HDD business. 

The Consent Agreement requires 

Western Digital to provide Toshiba with 

access to employees involved in the 

research, development, and production 

of desktop HDDs, cross license all 

intellectual property necessary to 

manufacture and sell desktop HDDs, 

and to supply Toshiba with up to 50 

percent of certain critical components 

needed for the divested business. In 

addition, the Consent Agreement 

requires Western Digital to contract 

manufacture desktop HDDs for Toshiba 

at cost until Toshiba is able to 

manufacture these products on its own. 

The Consent Agreement has been 

placed on the public record for 30 days 

to solicit comments from interested 

persons. Comments received during this 

period will become part of the public 

record. After 30 days, the Commission 

will again review the Consent 

Agreement and the comments received, 

and will decide whether it should 

withdraw from the Consent Agreement, 

modify it, or make final the 

accompanying Decision and Order. 

II. The Products and Structure of the 

Market 

HDDs are key inputs into computers 

and other electronic devices used to 

store and allow fast access to data. 

HDDs are used in various end-use 

applications including desktop and 

mobile computers, and in enterprise 

computing applications. 

The relevant line of commerce in 

which to analyze the effects of the 

Acquisition is desktop HDDs. Desktop 

HDDs are utilized in non-portable 

desktop or tower personal computers. 

Consumers of these products demand 

HDDs with the highest available 

capacity at the lowest price per gigabyte. 

Desktop HDDs are the only HDDs that 

meet these specifications. As a result, 

customers would likely not switch to a 

different kind of HDD in response to a 

five to ten percent increase in the price 

of desktop HDDs in sufficient numbers 

to make that price increase unprofitable 

for a hypothetical monopolist. 

The relevant geographic market for 

desktop HDDs is worldwide. Most 

HDDs, including desktop HDDs, are 

manufactured in Asia and are shipped 

to customers worldwide. Also, most 

large customers negotiate the purchase 

price of desktop HDDs at a global level. 

The desktop HDD market is highly 

concentrated, with three manufacturers 

currently in the market. After Western 

Digital’s acquisition of HGST, Western 

Digital’s market share would increase to 

approximately 50 percent, and the 

number of suppliers of desktop HDDs 

would decrease from three to two. 

III. Entry 

Neither new entry nor repositioning 

and expansion sufficient to deter or 

counteract the likely anticompetitive 

effects of the proposed acquisition in 

the desktop HDD market is likely to 

occur. Deterrents to entry into the 

desktop HDD market include high 

capital expenditures and intellectual 

property barriers. Because the market 

for desktop HDDs is mature with limited 

growth potential, it is unlikely that a 

potential competitor would have the 

incentive to make the substantial 

investments necessary to enter this 

market. 

IV. Effects of the Acquisition 

The proposed acquisition likely 

would result in anticompetitive effects 

in the market for desktop HDDs. The 

structure and characteristics of this 

highly concentrated and mature market, 

where competitors sell largely 

homogenous products and have 

substantial insight into their 

competitors’ price and output levels, 

suggests that the two remaining firms in 

the market would likely find it possible 

and profitable to coordinate on pricing 

or output. In addition, HDD customers 

generally wish to have at least three 

suppliers available to them. The fact 

that customers have a strong desire to 

source their desktop HDD purchases 

from several suppliers simultaneously 

in order to obtain competitive pricing 

and adequate supply suggests that the 

transaction could result in unilateral 

effects as well. 

V. The Consent Agreement 

The Consent Agreement resolves the 

competitive concerns raised by Western 

Digital’s proposed acquisition of HGST 

by requiring the divestiture of HGST’s 

assets relating to the manufacture and 

sale of desktop HDDs to Toshiba. This 

divestiture must occur within fifteen 

days after the acquisition but may be 

extended an additional fifteen days, if 

necessary, to allow for regulatory 

approval in other jurisdictions. 

Toshiba has the industry experience, 

reputation, and resources to replace 

HGST as an effective competitor in the 

desktop HDD market. Headquartered in 

Tokyo, Japan, Toshiba is a diversified 

manufacturer and marketer of advanced 

electronic and electrical products 

spanning digital consumer products, 

electronic devices and components, 

power systems, industrial and social 

infrastructure systems, and home 

appliances. Toshiba does not currently 

compete against Western Digital or 

HGST in the sale of desktop HDDs, but 

it does manufacture HDDs for use in 

mobile and enterprise applications. 

Because Toshiba has extensive 

experience manufacturing these other 

types of HDDs, and has a worldwide 

infrastructure for the research, 

development, and sale of desktop HDDs, 

Toshiba is well-positioned to replace 

the competition that will be eliminated 

as a result of the proposed transaction. 

Pursuant to the Consent Agreement, 

Toshiba would receive all of the assets 

necessary to replicate HGST’s market 

position in the desktop HDD business, 

including sixteen desktop HDD 

production lines, representing the 

capacity to produce more than twenty 

million desktop HDD units per year, 

along with the product designs for 

HGST’s most recent and advanced 

desktop HDD products. The Consent 

Agreement further requires Western 

Digital to provide Toshiba with access 

to HGST and/or Western Digital 

employees involved in the research, 

development, and production of 

desktop HDDs. In addition, the Consent 

Agreement also requires Western Digital 

to cross license all intellectual property 

necessary to manufacture and sell 

desktop HDDs and to supply Toshiba 

with up to 50 percent of certain critical 

components needed for the divested 

business. The Consent Agreement also 

requires Western Digital to contract 

manufacture desktop HDDs for Toshiba 

at cost until Toshiba is able to 

manufacture these products on its own. 

A divestiture of HGST’s desktop HDD 

assets to Toshiba will enable Toshiba to 

compete immediately with the merged 

entity. 

The Commission has appointed 

Phillip Comerford, Jr., Managing 

Director and Head of the Mergers & 

Acquisitions Group of ING Capital LLC, 

as Interim Monitor to oversee the 

divestiture of the desktop HDD assets. In 

order to ensure that the Commission 

remains informed about the status of the 

proposed divestiture, the Consent 

Agreement requires the parties to file 

periodic reports with the Commission 

until the divestiture is accomplished. 

If, after the public comment period, 

the Commission determines that 

Toshiba is not an acceptable acquirer of 


pmangrum on DSK3VPTVN1PROD with NOTICES
Federal Register / Vol. 77, No. 48 / Monday, March 12, 2012 / Notices 14525 

2U.S. Dep’t of Justice & Fed. Trade Comm’n, 

Horizontal Merger Guidelines § 1 (2010), available 

at http://www.ftc.gov/os/2010/08/100819hmg.pdf. 

the assets to be divested, or that the 

manner of the divestiture is not 

acceptable, Western Digital must 

unwind the divestiture and divest the 

assets within 180 days of the date the 

Order becomes final to another 

Commission-approved acquirer. If 

Western Digital fails to divest the assets 

within the 180 days, the Commission 

may appoint a trustee to divest the 

relevant assets. 

The purpose of this analysis is to 

facilitate public comment on the 

Consent Agreement, and it is not 

intended to constitute an official 

interpretation of the Consent Agreement 

or to modify its terms in any way. 

By direction of the Commission. 

Donald S. Clark, 

Secretary. 

Statement of the Federal Trade 

Commission Concerning Western 

Digital Corporation/Viviti Technologies 

Ltd. and Seagate Technology LLC/Hard 

Disk Drive Assets of Samsung 

Electronics Co. Ltd. 

After a thorough investigation the 

Federal Trade Commission has 

challenged Western Digital 

Corporation’s (‘‘Western Digital’’) 

proposed acquisition of Viviti 

Technologies Ltd., formerly known as 

Hitachi Global Storage Technologies 

(‘‘HGST’’). This challenge comes several 

months after the Federal Trade 

Commission closed its investigation of 

Seagate Technology LLC’s (‘‘Seagate’’) 

acquisition of Samsung Electronics Co. 

Ltd.’s hard disk drive assets 

(‘‘Samsung’’). The two proposed 

transactions were announced within 

weeks of each other, and both had 

potential implications for competition 

in the same product markets. 

Commission staff reviewed both matters 

at the same time in order to understand 

the effects on competition resulting 

from each transaction on its own, as 

well as the cumulative effect on the 

relevant markets if both transactions 

were allowed to be consummated. 

The evidence gathered in the 

Commission’s investigation revealed 

that the relevant product markets in 

which to assess the competitive impact 

of the proposed transactions are based 

on specific end-uses for hard disk drives 

(‘‘HDDs’’)—such as desktop, notebook, 

and enterprise—because product 

features, pricing, and competition differ 

by end-use applications. For many of 

these end-uses, we did not have reason 

to believe that the proposed transactions 

would result in effects that would have 

justified a challenge. In the 3.5 inch 

desktop HDD (‘‘desktop HDD’’) market, 

however, we had reason to believe the 

consummation of both of these 

acquisitions would result in likely 

anticompetitive effects. The 

Commission came to this conclusion 

based on the evidence from interviews 

with market participants, testimony of 

the parties’ executives, and documents 

produced by the parties and other 

industry participants. 

The Commission determined after its 

investigation that there were significant 

differences between the competitive 

implications of the two proposed 

mergers. Since in each case the 

acquiring firm was a strong competitor, 

attention turned to the characteristics of 

the two firms that were to be acquired 

in these proposed transactions—HGST 

and Samsung. Based on this analysis, it 

was clear that an independent HGST 

was much more likely to be an effective 

competitive constraint in the desktop 

HDD market than would an 

independent Samsung. 

In particular, HGST has been a strong, 

high quality and innovative competitor 

in the desktop HDD market. Moreover, 

HGST has been identified by a number 

of industry participants as a key driver 

of aggressive price competition in the 

desktop HDD market in 2010, and was 

well-positioned to grow its desktop 

HDD business in the near future. In 

contrast, Samsung had struggled to be 

competitive in the desktop HDD market. 

In a market for desktop HDDs 

containing only Western Digital, HGST, 

and the combined Seagate/Samsung 

entity, HGST would retain the ability 

and incentive to act as an effective 

constraint on desktop HDD pricing. By 

contrast, Samsung would be less likely 

to serve as a meaningful constraint on 

pricing in a desktop HDD market 

consisting of Western Digital/Hitachi, 

Seagate, and Samsung. Based on these 

considerations, the Commission made 

the decision to challenge the Western 

Digital/HGST transaction while clearing 

the Seagate/Samsung transaction, and to 

preserve the competitiveness of the 

desktop HDD market by requiring 

Western Digital to divest HGST’s 

desktop HDD assets to Toshiba 

Corporation under the terms of a 

proposed Consent Agreement. 

As we have explained in other cases, 

each merger that comes before the 

Commission is investigated and 

considered based on the particular facts 

presented. These investigations bear out 

the assertion in our Horizontal Merger 

Guidelines that our review of mergers 

‘‘is a fact-specific process through 

which the Agencies, guided by their 

extensive experience, apply a range of 

analytical tools to the reasonably 

available and reliable evidence to 

evaluate competitive concerns in a 

limited period of time.’’ 2

In addition to the scrutiny they have 

received from the Commission, many 

other antitrust enforcement agencies 

investigated these mergers. Commission 

staff cooperated with agencies in 

Australia, Canada, China, the European 

Union, Japan, Korea, Mexico, New 

Zealand, Singapore, and Turkey, and 

worked closely with the agencies’ 

investigative teams on the timing of 

review, substantive analyses, and 

potential remedies, during the pendency 

of these investigations. This close 

cooperation with foreign antitrust 

enforcers helped ensure an outcome that 

benefited consumers in the United 

States. 

[FR Doc. 2012–5851 Filed 3–9–12; 8:45 am] 

BILLING CODE 6750–01–P 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Disease Control and 

Prevention 

Statement of Organization, Functions, 

and Delegations of Authority 

Part C (Centers for Disease Control 

and Prevention) of the Statement of 

Organization, Functions, and 

Delegations of Authority of the 

Department of Health and Human 

Services (45 FR 67772–76, dated 

October 14, 1980, and corrected at 45 FR 

69296, October 20, 1980, as amended 

most recently at 77 FR 5804–5812, dated 

February 6, 2012) is amended to reflect 

the reorganization of the Office of the 

Chief Operating Officer, Office of the 

Director, Centers for Disease Control 

and Prevention. 

Section C–B, Organization and 

Functions, is hereby amended as 

follows: 

Delete in its entirety the functional 

statement for the Office of the Chief 

Operating Officer (CAJ), and insert the 

following: 

Office of the Chief Operating Officer 

(CAJ). (1) Provides mission and valuesbased leadership, direction, support and 

assistance to CDC’s programs and 

activities to enhance CDC’s strategic 

position in public health; ensure 

responsible stewardship; maintain core 

values; optimize operational 

effectiveness of business services; and 

institutionalize accountability for 

achieving management initiatives; (2) 

directs the conduct of operational 


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