EU says Broadcom’s VMware deal could put markets at risk

13 Apr 2023

Image: © Sundry Photography/

The European Commission said certain adapter markets are ‘very concentrated’ and that the deal could hamper Broadcom competitors.

The European Commission has said that Broadcom’s proposed $61bn acquisition of VMware could restrict competition in the markets of certain hardware components.

The Commission has submitted its preliminary view to Broadcom in the form of a statement of objections. These objections are the result of an ongoing, in-depth investigation into the proposed merger, which the Commission launched last December.

The $61bn deal was one of the largest announcements in the tech sector last year. If approved, it would see the Broadcom Software Group rebrand and operate as VMware, incorporating Broadcom’s infrastructure and security software as part of an expanded VMware portfolio.

But concerns have been raised about the potential this deal has in restricting competition, due to the power of both companies individually.

In its statement of objections, the European Commission said it is “concerned” that Broadcom may restrict competition in the markets of FC HBAs (fibre channel host bus adapters) and storage adapters.

The Commission said Broadcom is the leading supplier of these products and said the markets are “very concentrated”. The European authority said Broadcom could foreclose the hardware of competitors by “delaying or degrading their access to VMware’s server virtualisation software”.

“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,” the European Commission said.

The Commission said its investigation included analysing internal documents and gathering views from server users, manufacturers and virtualisation software suppliers.

Broadcom now has the options to reply to the Commission’s objections, consult the case file and request an oral hearing. The Commission, meanwhile, has until 21 June 2023 to take a final decision on the deal.

The deal is also being investigated by the UK’s Competition and Markets Authority (CMA), which first began probing the deal in January due to competition concerns.

Last month, the CMA begun its own in-depth investigation into the deal, after being informed by Broadcom that the company would not submit any undertakings regarding the merger. This investigation has a statutory deadline of 12 September.

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Leigh Mc Gowran is a journalist with Silicon Republic