Following a complaint from industry organization CISPE, Broadcom’s acquisition of VMware is once again under scrutiny by the EU Court. The complaint alleges that the European Commission failed to properly approve the $61 billion acquisition.
According to Bloomberg, CISPE, the Cloud Infrastructure Services Providers in Europe, claims that Broadcom has been abusing its new dominant position since the takeover. The organization accuses the Commission of failing to impose conditions to prevent this. According to CISPE secretary Francisco Mingorance, Broadcom has tightened its licensing conditions and raised prices. This would be detrimental to the European cloud market.
According to CISPE, VMware software is essential for virtualization. This software is widely used by cloud providers in Europe. By imposing stricter conditions and higher costs, Broadcom would restrict access to this technology. According to Mingorance, this would have direct consequences for a large part of the digital infrastructure in Europe.
EU Court of Justice organizes hearing
The complaint has now been lodged with the EU General Court, part of the European Court of Justice in Luxembourg. It will soon organize a hearing to address CISPE’s objections. Ultimately, the court will decide whether the European Commission must review its previous approval of the acquisition. The outcome could have a major impact on future competition decisions within the European technology sector.
CISPE says it has raised concerns with European regulators several times before. But according to the organization, nothing substantial has been done about those concerns. There was some contact, but no concrete results.
The acquisition was approved by the European Commission in December 2023. At the time, Broadcom provided guarantees regarding access to and interoperability of VMware software. However, since the deal was finalized in November of that year, new concerns have arisen about Broadcom’s behavior in the market. For example, the company is said to have terminated existing contracts and imposed new, more expensive terms and conditions. According to CISPE, this undermines competition in the European cloud market and further strengthens Broadcom’s dominant position.
Update: Broadcom responded to us regarding the allegations. It strongly disagrees with them. Here’s Broadcom’s full statement:
“Broadcom strongly disagrees with these allegations. The European Commission, along with twelve other jurisdictions around the world, approved our acquisition of VMware following a thorough merger review process, and we will uphold the commitments made to the Commission at that time. We continue to bring our customers better choices and solutions to address their most complex technology challenges.”
Also read: Broadcom ends VMware partner program