UK Watchdog Gives Green Light to Broadcom’s $61 Billion Acquisition of VMWare

Broadcom’s $61 billion deal to buy VMware has been approved by Britain’s Competition and Markets Authority (CMA) on Monday after a thorough investigation. The CMA found that Broadcom’s deal to buy VMware “would not significantly reduce competition in the supply of server hardware components in the UK”.

Following its initial Phase 1 investigation, the CMA identified competition concerns that required a thorough review and moved the deal to a Phase 2 investigation.

In a “Phase 2” study, it found that the potential financial benefit to Broadcom and VMware from competing products not working as well with VMware’s software does not outweigh the potential financial cost of losing business.

The panel also considered whether trade could hurt innovation. It found that this is unlikely to be a cause for concern, especially since information about new product adaptations needs to be shared with VMware only when it is too late to be of commercial benefit to Broadcom.

“Broadcom and VMware are US companies that supply hardware and software used by thousands of businesses and public bodies in the UK. Although the UK market represents a small proportion of the total sales of the merger, the CMA’s role is to scrutinize such deals to ensure that they will not harm competition in the UK,” said Richard Feasey, chairman of the independent panel.

In this case, after carefully examining the evidence and finding no competition concerns, “we have determined that the transaction can proceed,” Feasey added.

In July, the European Commission (EC) officially approved Broadcom’s $61 billion purchase of VMware, subject to certain conditions.

Broadcom has a very strong position in the supply market for certain hardware components. VMware is a key server virtualization software provider.

The US Federal Trade Commission (FTC) is currently investigating the deal.