March 30, 2023

The U.K. Competition and Markets Authority (CMA) has announced an in-depth investigation into Broadcom’s proposed $61bn acquisition of cloud computing and virtualisation company VMware, after Broadcom failed to offer immediate undertakings in response to concerns about the impact on the server market.

The CMA warned last week that the deal could adversely affect competition in the server market, potentially driving up the cost of computer parts and software for servers. The in-depth investigation could take up to six months.

In a statement, the CMA said: “The CMA has referred the anticipated acquisition by Broadcom Inc. of VMware, Inc. for an in-depth investigation, on the basis that, on the information currently available to it, it is or may be the case that this merger may be expected to result in a substantial lessening of competition within a market or markets in the United Kingdom.”

Broadcom has previously said it is working constructively with the regulator and that the deal would enhance competition and benefit businesses and consumers. However, the company declined to offer any undertakings within the five-day period following the CMA’s initial concerns.

While Broadcom expects to close the deal this year and is continuing to work with other regulatory bodies globally, the CMA’s decision to pursue an in-depth investigation suggests the acquisition may still face regulatory hurdles.

The sources for this piece include an article in Reuters.