UK says Broadcom’s $61 billion VMware deal could hurt server competition

Britain’s competitors regulator stated U.S. chipmaker Broadcom’s acquisition of VMware might make servers costlier, and it might refer the $61 billion deal to an in-depth inquiry except its issues had been addressed.

Broadcom agreed to purchase the cloud computing and virtualisation firm final yr to diversify into enterprise software program.

Britain’s Competition and Markets Authority (CMA) stated on Wednesday the deal might dampen innovation and drive up the price of laptop elements and software program for servers.

“Servers are a vital building block, functioning largely thanks to hardware products made by firms like Broadcom, working in unison with virtualisation software from firms like VMware,” stated CMA Executive Director David Stewart.

“We are concerned this deal could allow Broadcom to cut out competitors from the supply of hardware components to the server market and lead to less innovation at a time when most firms want fast, responsive, and affordable IT systems.”

The regulator stated Broadcom had 5 working days to handle its issues, after which it might resolve inside an extra 5 days whether or not to refer the deal to an in-depth investigation.

Broadcom stated it was working constructively with the CMA and it was assured it might deal with any issues. “We will demonstrate that the transaction enhances competition and benefits businesses and consumers through increased quality, innovation and choice,” a spokesperson stated in a press release.

“The combination of Broadcom and VMware is about enabling enterprises to accelerate innovation and expand choice by addressing their most complex technology challenges in this multi-cloud era, and we are confident that regulators will see this when they conclude their inquiry.”

The European Union is ready to subject an antitrust warning in regards to the deal, Reuters reported final month.

The EU competitors enforcer, which declined to touch upon the report, will decide by June 21.

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