European Commission follows the UK’s CMA and opens “an in-depth investigation” into Broadcom’s acquisition of VMware
The European Commission has again followed the UK’s Competition and Markets Authority (CMA) lead, as big tech acquisitions come under greater regulatory scrutiny.
Back in May this year Broadcom announced the proposed $61 billion (£51bn) acquisition of virtualisation giant VMware.
That deal is the second-biggest acquisition so far this year, after Microsoft’s $68.7bn buy of Activision Blizzard, which still remains under review by regulators around the world.
Large tech deals have been attracting close regulatory scrutiny amidst concerns of excessive market power being concentrated in the hands of a few players.
Last month in November the UK’s CMA announced it was conducting an initial review of Broadcom’s acquisition of VMware, which Broadcom said was “common practice” for such a large deal.
As the CMA announced its investigation, EU regulators also said at the time they would begin looking into the merger after being informed of the deal by Broadcom.
Now a month later, the European Commission has announced that it has openned an “in-depth investigation into the proposed acquisition of VMware by Broadcom.”
The Commission said it was particularly concerned that the transaction would allow Broadcom to restrict competition in the market for certain hardware components which interoperate with VMware’s software.
The Commission’s preliminary competition concern is that Broadcom could restrict competition in the market for the supply of NICs, FC HBAs and storage adapters.
The Commission now has 90 working days, until 11 May 2023, to take a decision.
“Broadcom, a major supplier of hardware components, is acquiring VMware, a key server virtualisation software provider,” said Margrethe Vestager, executive VP in charge of competition policy.
“Our initial investigation has shown that it is essential for hardware components in servers to interoperate with VMware’s software,” said Vestager.
“We are concerned that after the merger, Broadcom could prevent its hardware rivals to interoperate with VMware’s server virtualisation software. This would lead to higher prices, lower quality and less innovation for customers and consumers.”