UK Competition Authority Clears Broadcom’s $61 bn VMware Acquisition

The UK’s Competition and Markets Authority (CMA) has given its approval for US-based Broadcom’s acquisition of desktop virtualization software provider VMware, following an extensive investigation. The deal, valued at $61 billion, had been subject to scrutiny amid concerns about potential competition reduction in the supply of server hardware components in the UK.
Broadcom StrataXGS Tomahawk 5 switchAfter an initial Phase 1 investigation, the CMA identified competition concerns that prompted a deeper Phase 2 inquiry. In its Phase 2 findings, the CMA determined that the potential financial benefits for Broadcom and VMware in compromising the functionality of rival products within VMware’s software did not outweigh the potential financial costs in terms of lost business.

The authority also examined the potential impact of the deal on innovation. However, it concluded that this concern was unlikely, given that information about new product adaptations would only be shared with VMware at a stage where it would not provide commercial benefits to Broadcom.

Richard Feasey, chair of the independent panel overseeing the investigation, emphasized the significance of scrutinizing deals like this to prevent harm to competition in the UK market. Despite the relatively small proportion of the UK market in the merger’s context, the CMA’s duty remains to ensure competition remains unaffected. Feasey stated that, after careful consideration of the evidence and the absence of competition concerns, the CMA approved the deal to proceed.

This decision follows the European Commission’s formal approval of the acquisition in July, albeit with specific conditions. Broadcom, which holds a robust position in the supply of certain hardware components, is set to acquire VMware, a significant player in server virtualization software.

Meanwhile, the deal is under investigation by the Federal Trade Commission (FTC) in the United States, indicating continued regulatory scrutiny on the international stage.

As the acquisition moves forward, industry analysts are watching closely to assess how this consolidation might impact the broader landscape of hardware and virtualization solutions.

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