The investigation relates to concerns of price gouging and decreased competition for hardware components that interoperate with VMware's software.
A month after the UK’s Competition Market’s Authority (CMA) announced it was investigating Broadcom’s proposed acquisition of VMware, European antitrust regulators have launched thier own probe into the $61 billion deal.
In the US, the Federal Trade Commission (FTC) is five months into a separate investigation of the deal.
Meanwhile, the EU Commision said in a statement published on December 20 that it “is particularly concerned that the transaction would allow Broadcom to restrict competition in the market for certain hardware components which interoperate with VMware’s software.”
Elaborating on its concerns, the Commission said the deal could impact the supply of network interface cards, Fibre Channel host-bus adapters, and storage adapters by degrading interoperability between VMware software and competitors’ hardware to the benefit of its own hardware, leading to higher prices, lower quality and less innovation for business customers and consumers.
These concerns are not unfounded, as Tracey Woo, senior analyst for Forrester, noted back in September that following the purchases of CA and Symantec, Broadcom raised prices, decreased support, and stopped investing in innovation.
However, Broadcom President and CEO Hock Tan had already sought to allay these fears with VMware’s customers, writing in an October blog post that “the Broadcom business case for this transaction is premised on focusing on the business model, increasing R&D, and executing so that customers see the value of the full portfolio of innovative product offerings — not on increasing prices.”
The Commission now has until 11 May 2023, 90 working days, to make a ruling.
“We look forward to continuing our constructive work with the European Commission as part of their thorough review process,” Broadcom said in a press statement. “We are making progress with our various regulatory filings around the world, having received legal merger clearance in Brazil, South Africa, and Canada, and foreign investment control clearance in Germany, France, Austria, and Italy.” The company said it continues to expect that the transaction will close in 2023.
(This story has been updated with a statement from Broadcom and information about the US FTC’s inquiry into the proposed VMware purchase.)
