The European Commission (EC) has formally approved Broadcom’s $61 billion bid for virtualisation software giant VMware, with the caveat that Broadcom fulfills certain ongoing commitments around access and interoperability.
The deal, which is one of the biggest tech acquisitions of all time, was the subject of regulatory scrutiny when it was announced in May last year. Europe revealed plans for an in-depth probe in December citing competition concerns, while the UK followed suit in March.
The Federal Trade Commission (FTC) in the US, is also currently investigating the deal.
Broadcom’s interest in VMware stems from a push to diversify beyond hardware through extending deeper into enterprise infrastructure software.
The EC’s core concern was that through buying VMware, which provides virtualization software that works with hardware such as fibre channel host-bus adapters, storage adapters and network interface cards (which Broadcom provides) could restrict competition in the hardware markets in which Broadcom operates.
This meant that Broadcom could restrict or “degrade” interoperability between VMware’s software and Broadcom’s hardware rivals such as Marvell, which develops similar fibre channel host-bus adapters to Broadcom.
Thus, the EC has made this one of the conditions for approving the deal — Broadcom must provide guaranteed access and interoperability relating to the “APIs, materials, tools, and technical support” that allow rival hardware companies to use VMware’s virtualization software. And on the same terms as Broadcom does.
The commitment applies for the next 10 years and exists under direct supervision of the European Commission, with an “independent trustee” appointed to monitor the commitment.
