EU to probe Broadcom’s $61B acquisition of VMware

The European Commission has opened an in-depth antitrust investigation into the proposed $61 billion acquisition of cloud computing and virtualization company VMware by chipmaker Broadcom.

In a statement, the commission said it was concerned the transaction could allow the chipmaker to restrict competition for certain hardware components that interoperate with VMware’s software.

In particular, the European Commission (EC) will examine whether the deal could result in Broadcom restricting the market for the supply of Network Interface Cards (NICs), Fibre Channel Host-Bus Adapters and storage adapters.

It will also probe whether the transaction could affect development of smart NICs and whether Broadcom may start bundling its own software with VMware’s virtualization software following the deal.

The full antitrust investigation comes after the United Kingdom’s competition regulator in late November opened an initial probe of the transaction.

Meanwhile, in the United States, the Federal Trade Commission (FTC) has also moved ahead with a more stringent “second request” review of the deal.

If they progress, the regulatory probes have the potential to prevent Broadcom from closing its acquisition of the cloud computing company.

Broadcom, however, has argued that VMware’s multi-cloud management tools combined with Broadcom’s semiconductor and infrastructure software products could increase choice and innovation within the cloud computing market.

The European Commission was notified of the transaction on Nov. 15, and it now has 90 working days – until May 11 next year – to make a decision.

News of the EU’s decision to launch an in-depth antitrust probe was first reported by Reuters.