Skip to content

CMA clears Broadcom’s $69bn acquisition of VMware

Broadcom VMware
Image credit: Sundry Photography / Shutterstock

The UK’s competition regulator has cleared VMware’s $69bn acquisition of Broadcom following an in-depth investigation.

The Competition and Markets Authority (CMA) first flagged the deal as potentially harmful in March.

The CMA said that Broadcom, an American firm that develops and sells hardware used in computer servers, could gain an unfair competitive advantage by owning VMware, a company that sells software products and services for servers.

After identifying concerns with the deal, the CMA launched an in-depth phase two investigation in which an independent panel reviewed evidence from stakeholders.

The investigation has found that the acquisition would not substantially reduce competition in the supply of server hardware components in the UK.

The panel concluded that Broadcom would not stand to benefit financially by restricting rival’s access to VMware’s software.

Furthermore, concerns that the acquisition would give Broadcom access to sensitive data from rivals in the sector were dismissed. The panel found that the relevant information would only be shared with VMware at a stage when it is too late to be commercially beneficial to Broadcom.

“Broadcom and VMware are US-based companies supplying hardware and software used by thousands of businesses and public bodies in the UK,” said Richard Feasey, chair of the panel that carried out the inquiry.

“Even if the UK market represents a small proportion of total sales in a merger, the CMA’s job is to scrutinise deals like this thoroughly to ensure they don’t harm competition in the UK.”

Feasey added: “In this case, having carefully considered the evidence and found no competition concerns, we have concluded the deal can go ahead.”

The CMA has faced criticism this year for blocking other high-profile tech deals. In April, the regulator blocked Microsoft’s acquisition of US video game studio Activision, but has since reopened talks. The competition watchdog has also scrutinised deals from Amazon, Meta and Google.

Alex Haffner, a competition lawyer at the law firm Fladgate, said the Broadcom decision was “particularly noteworthy” because it gave an “unconditional thumbs up to the deal proceeding”.

Haffner said that in doing so, “the CMA goes further than the European Commission’s merger unit, which last month required the merging parties to give certain (interoperability) commitments” to allow Broadcomm’s main rival in the market “access to the information needed to ensure that those adaptors can operate effectively in conjunction with VMWare’s software”.

Topics