US chipmaker Broadcom’s acquisition of VMware could make servers more expensive, a British anti-trust watchdog has barked.
Britain’s Competition and Markets Authority (CMA) said it is refering the $61 billion deal to an in-depth inquiry unless its concerns were addressed.
For those who came in late, Broadcom agreed to buy the cloud computing and virtualisation company last year to diversify into enterprise software.
But the CMA is not having it saying that the deal could dampen innovation and drive up the cost of computer parts and software for servers.
CMA Executive Director David Stewart said: “Servers are a vital building block, functioning largely thanks to hardware products made by firms like Broadcom, working in unison with virtualisation software from firms like VMware.”
“We are concerned this deal could allow Broadcom to cut out competitors from the supply of hardware components to the server market and lead to less innovation at a time when most firms want fast, responsive, and affordable IT systems,” he said.
The regulator said Broadcom had five working days to address its concerns, after which it would decide within a further five days whether to refer the deal to an in-depth investigation.
Broadcom said it was working constructively with the CMA and it was confident it would address any concerns.
“We will demonstrate that the transaction enhances competition and benefits businesses and consumers through increased quality, innovation and choice,” a spokesperson 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 inquiry.”
