The UK market regulator (CMA) launched an official investigation into the acquisition of VMware. Broadcom wants to buy the firm for $61 billion, but regulators fear the deal may thwart competitors.
The CMA first voiced concerns about the acquisition in November 2022. The regulator launched a preliminary investigation to determine whether it had ground for an official inquiry. That appears to be the case. The CMA will intensively investigate the acquisition in the coming weeks.
The $61 billion deal is one of the largest acquisitions of the past year. Though Broadcom traditionally specializes in chips, the organization has been venturing into infrastructure and security services in recent years.
The acquisition of VMware brings a vast range of enterprise software to Broadcom. The scale of the deal puts market regulators on edge.
Large acquisitions are scrutinized by authorities worldwide. Some mergers put the buying party in control of a significant market share. That allows the buyer to thwart competitors — a practice banned in many countries, including the United Kingdom.
CMA and European Commission
The CMA will investigate whether the acquisition of VMware threatens competition in the UK market. If it finds grounds for objection, the regulator may block the deal. The CMA has until March 22 to decide.
The acquisition is also under investigation in the European Union. In addition to Broadcom, VMware collaborates with chipmakers such as Intel, Nvidia and AMD. The European Commission is investigating whether Broadcom could scale back such collaborations to seize a share of the chip market.
In addition, the regulator is reviewing whether Broadcom will bundle VMware’s software with other software solutions, such as the offerings of Symantec (acquired in 2019) and CA Technologies (acquired in 2018). The European Commission is the European Union’s top market regulator.