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The UK’s CMA has begun a deeper ‘phase two’ investigation into the deal due to concerns it could restrict competition, which has also been highlighted by the European Commission.
A UK regulator has begun an in-depth investigation into Broadcom’s planned $61bn acquisition of VMware, following a first stage probe earlier this year.
The UK’s Competition and Markets Authority (CMA) began the first stages of this investigation in January, due to concerns that Broadcom could restrict competition in the market for certain hardware components that interoperate with VMware’s software.
Following this investigation, the CMA asked Broadcom on 22 March to submit undertakings regarding these concerns. The UK authority warned that a phase two investigation would begin if they were not submitted or were not accepted.
In a new document published today (29 March), the CMA said it was informed by Broadcom that the company would not submit any undertakings regarding the merger.
As a result, the CMA has begun a deeper investigation and appointed an inquiry group to look into the proposed deal.
The $61bn deal was one of the largest announcements in the tech sector last year. If approved, it would see the Broadcom Software Group rebrand and operate as VMware, incorporating Broadcom’s infrastructure and security software as part of an expanded VMware portfolio.
But concerns were raised about the potential this deal has in restricting competition, due to the power of both companies individually.
Last December, the European Commission began an in-depth investigation into the merger bid, due to similar concerns that the deal would allow Broadcom to restrict competition in the market for certain hardware components that interoperate with VMware’s software.
Broadcom has previously said the deal aligns with its strategy of scaling its software business and would offer new growth opportunities. The semiconductor giant took a big leap into the software sector when it acquired enterprise software vendor CA Technologies for almost $19bn in 2018.
The company previously made a $103bn takeover bid for Qualcomm, but that deal was blocked by then US president Donald Trump in 2018 over national security concerns.
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