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European Commission to scrutinize proposed merger of HP, Compaq

The European Commission said yesterday it would examine the proposed US$25 billion merger between US computer giants Hewlett-Packard Co and Compaq Computer Corp.

``If the deal meets the EU thresholds for sales, then it will be examined by the [EU] Commission,'' said EU spokeswoman, Amelia Torres. The American-based companies announced the link-up late Monday.

The merger is expected to shake up the struggling computer industry. Both Compaq and HP have been hit hard by the downturn in the technology sector over the last year, laying off hundreds of employees.

Even though both companies are based in the US, the EU is allowed to examine the merger if the combined world sales of the companies are over five billion euros (US$4.5 billion) and where each company has sales of at least 250 million euros (US$225 million) in the 15-nation bloc.

The merger, if approved, will create a giant with 145,000 employees and 97 billion euros (US$87 billion) in revenue worldwide -- about the size of IBM Corp -- with products not only in the personal computer business but also in computer servers, printers and peripherals as well as high-tech services.

Torres said the companies have seven days to notify the Commission of a proposed merger following the signature of the linkup agreement.
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