Broadcom’s plan to acquire VMware comes under scrutiny in the UK

Broadcom’s plan to acquire VMware comes under scrutiny in the UK

British authorities suspect the $61 billion deal could limit competition.

The CMA explained their concerns in an announcement on Monday. “The Competition and Markets Authority (CMA) is considering whether the transaction may be expected to result in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services.”

The authority invited comments “from any interested party” until December 6. The verdict’s deadline, however, remains to be announced. Broadcom announced that it planned to buy VMware for $61 billion in May.

The threat of acquisitions

Last month, the companies announced they’re seeking European Union antitrust approval. Such approval, however, will not automatically extend to the post-Brexit United Kingdom.

Tech deals have traditionally drawn intense scrutiny from regulators around the world. The spotlight is shone brightest on deals that pose the threat of bringing too much market power into the hands of a few.

Moreover, the tech sector is particularly susceptible to large companies acquiring smaller, competent and perhaps more agile startup competitors, only to shut them down to eliminate competition.

Broadcom was quick to reassure

Broadcom explained the acquisition as an attempt to diversify its business into enterprise software with an emphasis on multicloud environments. During the acquisition’s announcement, Broadcom was quick to assure that there would be no price hike on VMware products.

The company makes it a practice not to raise the prices of existing products after acquisitions, Broadcom’s CEO Hock Tan wrote in a blog post at the time of the acquisition’s announcement. He noted that Broadcom’s strategy revolves around the development of new technology and the continuous improvement of existing products.