The European Commission today (March 31) cleared Sony and NEC to forge a joint venture which would compete in the optical disc drive markets.
The Commission — the European Union’s executive authority -– gave the green light to the proposed link-up between the two Japanese companies for the development, design and marketing of optical data-storage disc drives, which includes CD and DVD drives with read and write functions.
The Commission inquiry found that the company, to be known as Sony NEC Optiarc Inc, would have a minimal effect on rivals in Europe. Sony and NEC intend to launch the joint venture by April 3.
“The creation of the joint venture will neither significantly reduce competition on the market nor reduce consumer choice,” the Commission said in a statement.
Under EU rules, the Commission has the authority to vet mergers involving companies with joint global annual revenue of more than €5 billion ($6 billion) — if at least two of the companies involved have revenue of more than €250 million ($303 million) revenue in Europe.
Sony NEC Optiarc Inc will have around 350 employees and combined revenue of ¥220 billion or €1.5 billion ($1.8 billion).
Both parent companies will transfer their optical data-storage disc drive businesses to the joint venture and subsequently terminate their own activities in this market. The new company’s production will be outsourced, in line with the ongoing trend in high-tech industries, especially computer and telecommunications.
Despite the joint venture, the companies remain on either side of the emerging digital optical disc format war between the Sony-backed Blu-Ray and the Toshiba/NEC HD-DVD.