The pending warning from the European Commission is just the latest in Broadcom’s antitrust problems.
EU antitrust regulators have postponed their decision on US chipmaker Broadcom’s proposed €57 billion takeover of VMware, according to Reuters. The decision, which the European Commission Competition Authority had originally planned for June 7, will be delayed by two weeks to June 21, the European Commission said this week.
The antitrust watchdog said the extension was agreed with Broadcom, which is looking to diversify into enterprise software.
Takeover is a lateral move for Broadcom
Headquartered in Palo Alto, California, VMware touts itself is a leading provider of multi-cloud services for all apps, enabling digital innovation with enterprise control. Broadcom is seeking to acquitre the company in order to move into the enterprise software sector.
However, the European Commission opened an investigation into the deal last December. The EC says that the takeover, which Broadcom announced last year, would allow Broadcom to restrict competition in the market for certain hardware components which interoperate with VMware’s software.
The Commission is expected to warn Broadcom about potential anti-competitive effects of the proposed deal in the coming weeks, sources close to the matter have told Reuters. Standard procedure for such warnings is that the EC will set out its concerns in a statement of objections, and Broadcom can subsequently ask for a closed hearing to defend its deal in front of senior Commission and national competition officials as well as rivals and the Commission’s lawyers.
Mergers and acquisitions in the tech sector have come under more intense scrutiny on both sides of the Atlantic recently, as regulators worry about larger companies buying smaller but more innovative rivals just to shut them down and eliminate competition.
Aside from the EU regulator’s the UK’s Competition and Markets Authority has also opened up an investigation into Broadcom’s VMware deal. In addition, the US Federal Trade Commission issued a complaint last April charging Broadcom with illegally monopolizing markets – a fact that will certainly play a part in the European Commission’s deliberations.
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