Britain’s Competition and Markets Authority (CMA) has given provisional approval for U.S. tech giant Broadcom’s $69 billion deal to buy VMware.
This marks Broadcom’s largest-ever deal and represents its strategic move towards diversification into enterprise software. The CMA’s decision came after scrutinizing the potential impact on competition in the supply of critical computer server products in the UK.
Earlier, the European Union regulators had given the green light for the deal, provided that Broadcom offered interoperability remedies to some of its competitors to address any concerns. CMA’s investigation focused on whether the acquisition would lead to increased prices for servers and negatively affect Broadcom’s rivals in the market.
However, the CMA concluded that the deal would not substantially reduce competition in the supply of server hardware components in the UK. The regulator also examined whether the merger could hamper innovation, particularly if the merged company limited the compatibility of their products with VMware’s server virtualization software. The CMA panel found that the deal would unlikely harm innovation, as any new product adaptations would only be shared with VMware when it is too late to be of commercial benefit to Broadcom’s competitors.
The approval from the CMA is significant for Broadcom as it brings the company one step closer to finalizing the acquisition in the current fiscal year. However, the deal is still under scrutiny by the U.S. Federal Trade Commission.
