The U.K.'s competition watchdog said it may open an in-depth investigation into U.S. chipmaker Broadcom's acquisition of VMware unless the companies adequately address its concerns about the deal.
Britain’s Competition and Markets Authority (CMA) said Broadcom's $61B takeover of cloud and virtualization tech developer VMware could drive up the cost of parts and software for computer servers.
- Enterprises use VMware’s products to run their servers and cloud servers more efficiently.
- The
CMA is concerned that the deal would allow Broadcom to diminish
competition in the supply of hardware to the server market, according to
CMA Executive Director David Stewart.
- The acquisition could
result in diminished innovation during "a time when most firms want
fast, responsive, and affordable IT systems."
- Servers, a "vital
building block," are dependent on hardware made by companies like
Broadcom working alongside virtualization software from VMware and other
firms, Stewart said.
- The CMA has given Broadcom five business
days to address its concerns. Once the response is received, the agency
said it will decide within another five business days whether to review
the deal further.
- Broadcom announced in May 2022 that it's acquiring VMware for the equivalent of $61B in cash and stock, making it one of the largest tech deals of all time.
- The
deal, which would fold Broadcom's software unit into VMware, is
expected to help Broadcom diversify beyond semiconductors design and
sales and into the enterprise software business.
