Broadcom: VMware Acquisition Won't Restrict Competition for Hardware

Broadcom disputes a European Commission claim that its proposed $61 billion acquisition of VMware may restrict market competition for certain hardware components.

In December, the commission opened an in-depth investigation to assess if Broadcom’s acquisition of VMware may restrict competition in the market for the supply of network interface cards (NICs), fiber channel host-bus adapters (FC HBAs) and storage adapters.

In addition, the commission had concerns that Broadcom may hinder the development of SmartNICs by other providers, and start bundling VMware’s virtualization software with its own software and no longer offer VMware‘s virtualization software as a stand-alone product.

Broadcom May Restrict Competition for FC HBAs, Storage Adapters

This week, the commission said Broadcom may restrict competition for the supply of FC HBAs and storage adapters. It could do so by foreclosing competitors’ hardware by delaying or degrading their access to VMware’s server virtualization software.

“Broadcom is the leading supplier of FC HBAs and storage adapters,” the commission said. “The markets are very concentrated.”

Broadcom competitors could be hampered in their ability to compete in these markets, the commission said. This, in turn, could lead to higher prices, lower quality and less innovation for business customers, and ultimately consumers.

Broadcom can reply to the commission’s statement of objections, consult the commission’s case file and request an oral hearing.

Broadcom sent us the following statement:

“We remain confident that this deal does not present any competition issues and continue to work constructively with the European Commission as part of their thorough review process. We are making progress with our various regulatory filings around the world.”

Broadcom expects the acquisition will close in its fiscal year 2023 ending Oct. 30.

“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 multicloud era, and we are confident that regulators will see this when they conclude their review,” Broadcom said.

The commission has until June 21 to make a final decision regarding the acquisition.