The European Commission is worried Broadcom’s proposed $61 billion merger with VMware will be anti-competitive.
For those who came in late, the Commission’s watchdog started snuffling around the deal at the end of last year to assess the impact the acquisition may have on competition in the market for the supply of NICs, FC HBAs and storage adapters. Now, the Commission says it has some “reservations.”
“As a result of this in-depth investigation, the Commission is 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 virtualisation software,” the watchdog said in a statement.
“Broadcom is the leading supplier of 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,” it said.
The regulator voiced concerns that Broadcom may hinder the development of SmartNICs by other providers, and start bundling VMware’s virtualisation software with its own software and no longer offer VMware’s virtualisation software as a stand-alone product.
Broadcom said it was confident that the deal did not present any competition issues and it would continue to work constructively with the European Commission as part of their thorough review process.
It said that it expected the deal to close in Broadcom’s fiscal year 2023. 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.
