EC objects to Broadcom VMware acquisition
April 13, 2023
By Colin Mann
The European Commission has informed software solutions specialist Broadcom of its preliminary view that its proposed acquisition of enterprise software provider VMware may restrict competition in the market for certain hardware components which interoperate with VMware’s virtualisation software.
In December 2022, the Commission opened an in-depth investigation to assess if Broadcom’s acquisition of VMware may restrict competition in the market for the supply of NICs, FC HBAs and storage adapters. In addition, the Commission had concerns that Broadcom may: (i) hinder the development of SmartNICs by other providers, and (ii) start bundling VMware’s virtualisation software with its own software and no longer offer VMware’s virtualisation software as a stand-alone product.
The Commission has conducted a wide-ranging investigation to understand the market and the potential impact of the deal. This investigation has included, among others, analysing internal documents provided by the parties and gathering views from server users and manufacturers, as well as from virtualisation software suppliers.
As a result of this in-depth investigation, the Commission is concerned that Broadcom may restrict competition in the global markets for the supply of FC HBAs and storage adapters by foreclosing competitors’ hardware by delaying or degrading their access to VMware’s server virtualisation software.
The Commission notes that Broadcom is the leading supplier of FC HBAs and storage adapters. The markets are very concentrated. If the competitors of Broadcom are hampered in their ability to compete in these markets, this could in turn lead to higher prices, lower quality and less innovation for business customers, and ultimately consumers.
A Statement of Objections is a formal step in an investigation, where the Commission informs the companies concerned in writing of the objections raised against them. The sending of a Statement of Objections does not prejudge the outcome of the investigation. Broadcom now has the opportunity to reply to the Commission’s Statement of Objections, to consult the Commission’s case file and to request an oral hearing.
The Commission opened an in-depth investigation on December 20th, 2022 and now has until June 21st 2023 to take a final decision.