UK approves billion-dollar takeover of VMware by Broadcom

The British Consumer and Market Authority has cleared Broadcom’s VMware acquisition. The regulator concludes that the deal will not have major consequences for competition in the British server hardware market.

The British CMA comes to that conclusion after an extensive ‘phase 2’ study. The decision marks the end of the British investigation into the takeover. The CMA believes that competition in the server hardware market will not be significantly reduced after the acquisition by Broadcom is completed. Therefore, the deal may go ahead in the United Kingdom.

The CMA investigated, among other things, whether Broadcom can ensure that competitors’ hardware is less well supported by VMware’s software. According to the regulator, this would not outweigh the loss of turnover that Broadcom would suffer as a result.

The CMA also examined whether the takeover could ‘stifle innovation’. The regulator looked at whether Broadcom’s competitors must share sensitive information with VMware in order for their hardware to work properly with VMware and whether there are concerns that Broadcom can view it. According to the CMA, that information only needs to be shared with VMware relatively late, at a stage ‘where it is too late to provide commercial benefit to Broadcom’.

Broadcom announced last year that it wanted to acquire VMware for $61 billion. This makes it the largest acquisition the company has made to date. The takeover was recently approved by the European Commission. The EU did this after Broadcom made several concessions and promises. The acquisition is currently still under investigation by the US Federal Trade Commission.