The European Commission has given its consent to a joint venture between Hitachi Ltd. of Japan and LG Electronics Inc. of South Korea, arguing that the combine will face stiff competition from competitors.
The two firms are pooling their strengths in the development of optical data-storage disc drives such as CD drives and DVD (Digital Versatile Disc) drives for computers. Both parents will transfer their activities to the joint venture and subsequently exit the market at stake, the Commission said in a statement.
The responsibilities of the Commission, the executive body of the European Union, include acting as competition regulator.
Production of optical disc drives will be outsourced either to the parent companies or to independent manufacturers, the companies told the Commission.
"The Commission cleared the deal because of the limited market shares of the parents," the Commission said in a statement, adding that the venture will face competition mainly from Toshiba Corp. of Japan, Samsung Electronics Co. Ltd. of South Korea, and Lite-ON Electronics Inc. of Taiwan.
"As a result, the creation of the joint venture will neither significantly reduce the competition in the market nor significantly reduce the choice for consumers," the Commission said.