After putting Broadcom on notice last week that it was concerned that the proposed $61 billion Broadcom-VMware deal could adversely affect competition in the server market, the U.K. Competition and Markets Authority (CMA) announced today that it was proceeding with an in-depth investigation that could take up to six months.
“The CMA has referred the anticipated acquisition by Broadcom Inc. of VMware, Inc. for an in-depth investigation, on the basis that, on the information currently available to it, it is or may be the case that this Merger may be expected to result in a substantial lessening of competition within a market or markets in the United Kingdom,” The CMA said in a statement today.
The CMA gave Broadcom just five days to respond to its concerns in last week’s notice. Apparently, the company was unable to provide sufficient information to stave off a more thorough review, and here we are.
It’s hard to read too much into what the investigation means to the deal. The CMA has taken this step with other large tech deals in the recent past and come back with a stamp of approval, as it did with the $8.1 billion merger between NortonLifeLock and Avast and the $7.3 billion merger between London-based satellite company Inmarsat and its U.S. counterpart Viasat.
You could argue that these companies were in more direct competition than Broadcom, a chip maker, and VMware, which is mostly known for server virtualization, but it is precisely the server market competition that concerns the CMA.
It’s worth noting that the CMA does take action when it thinks competition is being adversely impacted, as it did in October when it ordered Meta to sell Giphy.
Broadcom continues to say that it is working closely with the CMA, although one wonders how closely, given that it failed to respond to the previous request for more information. The company still expects to close the deal this year as it continues to work with other regulatory bodies around the world.