By Ben Lucas
Broadcom’s proposed purchase of VMware would not substantially reduce competition in the supply of server hardware components in the UK, the industry regulator has said.
The UK’s competition watchdog has cleared the largest deal in its history as it said that the tie-up of US companies Broadcom and VMware would not damage UK competition.
The 69 billion dollar (£54 billion) deal – the largest the Competition and Markets Authority (CMA) has ever investigated – raises “no competition concerns”, the regulator said.
It cleared the deal after an in-depth investigation which considered several areas where there had been some concern.
Broadcom makes computer chips, while VMware is a cloud technology company. The CMA had looked at whether by owning VMware, Broadcom would be able to spy on its competitors who used VMware services.
It assessed whether rival chipmakers would have to share commercially sensitive information with VMware to ensure their chips work with VMware’s software.
But the watchdog said that “this is unlikely to be a concern, in particular since information about new product adaptations only needs to be shared with VMware at a stage when it is too late to be of commercial benefit to Broadcom.”
It also looked at whether the merged companies could make VMware’s software work less well with products made by Broadcom’s rivals. But it concluded that this would not make sense for the company, as the benefit would be outweighed by the financial cost.
Richard Feasey, chair of the independent panel which investigated the deal, said: “Broadcom and VMware are US-based companies supplying hardware and software used by thousands of businesses and public bodies in the UK.
“Even if the UK market represents a small proportion of total sales in a merger, the CMA’s job is to scrutinise deals like this thoroughly to ensure they don’t harm competition in the UK.
“In this case, having carefully considered the evidence and found no competition concerns, we have concluded the deal can go ahead.”
The CMA had already provisionally cleared the deal in July.
Press Association – by August Graham
