FTC unanimously approves HP-Compaq merger

7 March 2002 The US Federal Trade Commission has unanimously approved the proposed $22 billion (€25.1bn) merger of computing giants Hewlett-Packard (HP) and Compaq.

A statement by the five-member FTC that the merger does not present clear anti-trust issues is another major boost for HP CEO Carly Fiorina, who has faced fierce criticism from a number of major shareholders. Earlier this week, the Institutional Shareholder Services (ISS), an investment advisory company whose clients own a large portion of shares in HP, advised its shareholders to vote in favour of the merger.

This decision closes a six-month investigation by the FTC, which aimed to decide whether overlaps in the two companies’ product lines would affect competition in the hardware sector. One of the key thrusts of the investigation was to decide whether to force HP or Compaq to divest assets in their high-end server divisions.

The FTC said that its initial concerns that the merger would lessen competition, particularly in the high-performance 64-bit chip market, had not been proven. Conversely, it concluded that the combination of both companies could actually stimulate competition in the wider computer industry.

It added, “The commission conducted an extensive investigation of the merger’s effects on competition in markets for personal computers, servers and microprocessors, among other products. Based on that investigation, the commission did not find reason to believe that the proposed transaction would impair competition in any relevant market.”

Despite this latest boost, the final vote, scheduled for 19 March 2002, could still go against the merger.

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Ben Rossi

Ben was Vitesse Media's editorial director, leading content creation and editorial strategy across all Vitesse products, including its market-leading B2B and consumer magazines, websites, research and...

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