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CMA provisionally clears VMware’s £53bn acquisition of Broadcom

CMA VMware
Image credit: Sasima via Shutterstock

The UK’s competition regulator has provisionally cleared the $69bn (£53.4bn) acquisition of VMware by Broadcom following an investigation.

The Competition and Markets Authority (CMA) first launched its investigation in November 2022 due to concerns that Broadcom, which develops and sells hardware components, would gain an unfair advantage by owning of VMware, which sells software used in Broadcom’s tech.

The CMA’s phase one investigation found there was some legitimacy to its original concerns, warranting a more in-depth inquiry.

However, the CMA has concluded that there would be limited financial benefit for Broadcom to restrict rival’s access to VMware’s software as it would ultimately come at a greater cost to the software firm’s revenue.

“Computer servers – often using the products of Broadcom and VMware – play a critical role in enabling us to work in the office or at home or to access TV shows or use banking services,” said Richard Feasey, chair of the independent inquiry panel that carried out the investigation.

“That’s why it’s important we investigate this deal to ensure that UK businesses continue to benefit from competition and innovation in the supply of server components.

“After carefully considering a broad range of evidence, we have provisionally found that this deal would not harm competition.”

The CMA has taken a major role in monitoring US tech acquisitions, such as the Microsoft deal to acquire Activision Blizzard. That deal was cleared by a US court after the Federal Trade Commission blocked the deal. In April, the CMA blocked the deal, but talks have since reopened to find a way forward.

Alex Haffner, competition partner at the law firm Fladgate said: “Merger decisions coming out of the CMA in the immediate aftermath of events in the Microsoft/Activision case will bear closer scrutiny for signs whether the chastening experience of the CMA in the latter will inform the way it approaches ongoing cases.”

Haffner said the CMA would likely be “wary of how its decision-making is viewed from a public relations perspective it will remain determined to stick to its guns and determine each case on the basis of the facts before it”.