Brussels, 01/02/2002 (Agence Europe) - The Commission has approved the acquisition of Compaq Computer Corp (Compaq) by Hewlett-Packard Co (HP). The deal will involve an exchange of shares to the value of $25 billion (one Compaq share for 0.6325 HP shares) making it the biggest acquisition ever in the IT world, creating a new super-giant with a turnover of some $87 billion, employing 135,000 employees in 160 countries in direct competition with IBM. HP's acquisition of Compaq was formally filed with the European Commission for regulatory approval on December 20 2001 and the Commission's resulting analysis concluded that HP would not be in a position to increase prices and that consumers would continue to benefit from sufficient choice and innovation. The Commission's analysis focused on the combination of HP and Compaq's activities in the markets for PCs, servers, handheld products, storage solutions and facilities (the new company will be the leading PC supplier in the world, be in second position for servers and third position for services). The Commission also assessed the impact of the merger on HP's joint development of the Itanium processor with Intel, as well as HP's increased opportunity for joint sales of PCs and printers following the integration of Compaq's PC products. With regard to PCs, the Commission concluded that the merger would continue to face strong competition in Europe (from IBM in particular) and together with the absence of significant barriers to entry and the practice of non-exclusive contractual relationships between retailers and manufacturers, this would prevent the new HP from any attempt to significantly raise prices. On the server market, the Commission similarly concluded that the proposed transactions was unlikely to raise competitive issues. As to the potential impact of the Itanium processor, the Commission concluded that the merged entity would not be able to foreclose competitors' access to this component. In view of these conclusions, the Commission decided not to oppose the deal, which is still in the process of being examined by the US antitrust authorities.