The European Commission has informed Broadcom of its objections to the company’s proposed $61 billion acquisition of VMware — the latest hurdle the company needs to clear after regulatory agencies in the UK and US also raised concerns.
“Broadcom is the leading supplier of Fiber Channel host bus adapters (FC HBAs) and storage adapters. The markets are very concentrated. If the competitors of Broadcom are hampered in their ability to compete in these markets, this could in turn lead to higher prices, lower quality and less innovation for business customers, and ultimately consumers,” the Commission said in a statement.
Having carried out an in-depth investigation, the Commission said it remained concerned that Broadcom may restrict competition in the global markets for the supply of FC HBAs and storage adapters by “foreclosing competitors' hardware” by “delaying or degrading” their access to VMware's server virtualization software.
The Commission, the EU's executive branch, opened its in-depth investigation on 20 December 2022 and now has until 21 June 2023 to make a final decision.
“We remain confident that this deal does not present any competition issues and continue to work constructively with the European Commission as part of their thorough review process,” Broadcom said in a statement. “The combination of Broadcom and VMware is about enabling enterprises to accelerate innovation and expand choice by addressing their most complex technology challenges in this multi-cloud era, and we are confident that regulators will see this when they conclude their review.”
The company added that it still expects the transaction to close in its fiscal year 2023.
Broadcom now has the opportunity to reply to the Commission's Statement of Objections, to consult the Commission's case file and to request an oral hearing.
Semiconductor manufacturer and infrastructure software giant Broadcom first announced its intention to acquire VMware in May last year.
However, the deal soon came under scrutiny from regulatory authorities, with the EU Commission, the UK’s Competition Market’s Authority (CMA), and the FTC in the US all announcing investigations into the proposed takeover.
On March 29, the CMA announced that it would be starting its phase two investigation of the deal, after Broadcom declined to offer any undertakings in response to concerns put forward by the regulator. The CMA has now set a statutory deadline of 12 September 2023 to publish its decision.