Houston-based Compaq has exclusive contracts to sell at stores of RadioShack Corp and Sears, Roebuck & Co, while Palo Alto, California-based Hewlett-Packard is prominent in Office Depot and Best Buy Co outlets.
"If they've got contracts that make stores carry so many of their computers or have to be exclusive, remedies could be you can't preclude competition in that way," Elhauge said.
If the companies reduce their presence in the retail side, some investors might actually cheer. Retail sales aren't as profitable as direct sales.
The concentration of power in the market for servers, the machines that run Web sites and networks, may also cause concern among regulators, analysts said. Together, the two companies had 37 percent of worldwide server shipments in the second quarter, according to Gartner. Along with Dell's 18 percent share and International Business Machines Corp's 17 percent, that would mean three companies would control 72 percent of the market.
"If they license some of the server technology to give other companies a chance, that might be satisfactory," said Dan Niles, an analyst at Lehman Brothers, who doesn't own shares of either company.
If the companies don't accept what regulators propose, that means litigation and delays, Sterling said.
The lawyers and analysts are split on whether Europe will be tougher on the merger than US regulators. Earlier this year, the EU blocked General Electric Co's US$47 billion acquisition of Honeywell International Inc, ruling that the purchase would have stifled competition and hurt consumers. Still, most say that in the end, the European regulators, like their US counterparts, will approve Hewlett-Packard's acquisition of Compaq.
"This deal will probably survive the government's scrutiny, but not without some modifications," Sterling said. "There's no reason for regulators or other companies to scuttle the deal."
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