The regulator concluded that the possible financial gain to Broadcom and VMware from making competing products less compatible with the latter's software will not outweigh the potential financial cost in terms in terms of reduced business opportunities
Broadcom secures UK CMA approval for its $61bn acquisition of VMware. (Credit: Cmglee/Wikimedia Commons)
The UK Competition and Markets Authority (CMA) has cleared Broadcom’s previously announced $61bn acquisition of VMware following the completion of an in-depth Phase 2 probe into potential competition concerns in Britain.
The final approval for the proposed merger has come following CMA’s provisional clearance given to the parties last month.
According to the British competition watchdog, the deal between the American semiconductor manufacturer Broadcom and VMware will not significantly stifle competition in the supply of server hardware components in the UK.
CMA phase 2 independent inquiry group chair Richard Feasey said: “Broadcom and VMware are US-based companies supplying hardware and software used by thousands of businesses and public bodies in the UK.
”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.
”In this case, having carefully considered the evidence and found no competition concerns, we have concluded the deal can go ahead.”
The Phase 1 investigation into the deal was launched by the CMA in January 2023.
Following the initial probe, the regulator stated that if the deal goes through, Broadcom will prevent other suppliers from being able to deliver VMware-compatible hardware including network interface cards (NICs) and storage adapters.
Besides, the CMA found that the deal could help Broadcom to access commercially sensitive information including the details of upcoming products that other hardware suppliers currently deliver to VMware.
The deal was subsequently referred for an in-depth phase 2 investigation in March 2023.
Following the in-depth probe, the regulator concluded that the possible financial gain to Broadcom and VMware from making competing products less compatible with the latter’s software will not outweigh the potential financial cost in terms of decreased business opportunities.
The cash-and-stock deal between Broadcom and the California-based cloud computing and virtualisation technology firm VMware was announced in May 2022.