U.S. begins antitrust review of Data Domain bids

By Jim Finkle and Anupreeta Das

BOSTON/NEW YORK (Reuters) - The U.S. government has begun an antitrust review of competing bids for Data Domain Inc (DDUP.O), an inquiry that could decide who succeeds in buying the specialty storage equipment maker.

The U.S. Federal Trade Commission is investigating dueling $30-per-share bids from EMC Corp (EMC.N), the world's biggest maker of data storage equipment, and smaller rival NetApp Inc (NTAP.O), officials at the two companies said on Monday.

EMC is trying to snatch Data Domain away from NetApp, which has already signed an agreement to buy the company for $1.9 billion. Both suitors are lobbying shareholders, and analysts expect the price to go higher.

The government review is a wildcard in the battle for Data Domain, a small but fast-growing player in the high-tech data storage market.

If regulators question whether an EMC-Data Domain combination could create unfair competition, that might push the balance in favor of NetApp, which analysts say otherwise lacks the financial resources to outbid EMC. [ID:nN10466690]

NetApp claims its products are more complementary with Data Domain's data back-up technology, whereas EMC's products compete more directly. EMC disputes that argument. "We anticipate a normal review without an substantive delay," said EMC spokesman Michael Gallant.

EMC and NetApp make hardware and software that let companies store, manage and back up their data. They want Data Domain's technology because it eliminates duplicate data during back-up processes, thereby saving companies storage space.

EMC and Data Domain are the two top players in the estimated $3 billion market for deduplication software, according to Gartner analyst Dave Russell. Other providers are Symantec Corp (SYMC.O), International Business Machines Corp (IBM.N) and Quantum Corp (QTM.N), which has a partnership with