Broadcom faces EU antitrust warning on US$61 billion VMware deal: sources

US chipmaker Broadcom is set to receive an European Union (EU) antitrust warning about the possible anti-competitive effects of its proposed US$61 billion bid for cloud computing company VMware in the coming weeks, people familiar with the matter said.

The European Commission opened an investigation in December, saying the deal, announced last year, would allow Broadcom to restrict competition in the market for certain hardware components which interoperate with VMware’s software.

The EU competition enforcer, which will decide on the deal by Jun 7, declined to comment.

Tech M&A deals have attracted more intense scrutiny on both sides of the Atlantic recently as regulators worry about giant companies acquiring smaller, more innovative rivals.

The Commission will set out its concerns in a statement of objections, the people said. Companies can subsequently ask for a closed hearing to defend their deals in front of senior Commission and national competition officials as well as rivals and the Commission’s lawyers.

Broadcom said it would continue its “constructive work” with the Commission. The deal has received the green light in Brazil, South Africa and Canada, while the UK competition watchdog is investigating the acquisition.

“We continue to expect the transaction will close in Broadcom’s fiscal year 2023,” the company said.

Broadcom has told the EU enforcer that the presence of Amazon, Microsoft and Google shows that there is strong competition in the cloud computing market, other people familiar with the matter told Reuters in October.

Beltug, a Belgian association of CIOs & Digital Technology leaders, and its counterparts France’s Cigref, CIO platform Nederland and VOICE Germany have said that the deal could lead to big prices increases and tougher commercial practices against customers. REUTERS