THE European Commission approved US chipmaker Broadcom’s planned US$61-billion takeover of cloud computing firm VMware on Wednesday (Jul 12) after the company offered remedies to ease competition concerns.

The massive deal raised fears that it would stifle competition following its announcement in May 2022, prompting probes by antitrust watchdogs in the European Union and Britain.

The European Commission said its in-depth investigation found that the transaction, as originally proposed, “would harm competition in the worldwide market for the supply” of Fibre Channel Host-Bus Adapters (FC HBAs).

Part of the worries was that rivals would not be able to build components compatible with those made by VMware.

As a remedy, Broadcom offered interoperability commitments to ensure that VMware software would work with that made by rival Marvell and other potential competitors, the EU’s executive arm said.

The company also guaranteed access to the source code for all of its current and future FC HBA drivers through an irrevocable open source licence.

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The commission concluded that “the proposed acquisition, as modified by the commitments, would no longer raise competition concerns”.

‘Enhance competition’

Britain’s Competition and Markets Authority (CMA) decided in March to deepen its probe into the mega-merger.

Broadcom is seeking to expand into the software market to boost its server business and has already acquired two complementary firms, CA Technology and Symantec.

VMware, a leader in cloud computing and virtualisation technology, was spun out of Dell Technologies in 2021.

Broadcom said that while it believes the deal “will only increase competition and innovation in cloud computing”, it provided a remedy “that preserves interoperability, a core principle that would not have changed as a result of this transaction”.

The California-based company said in a statement that it expects the transaction to close in its 2023 fiscal year.

“Broadcom looks forward to continuing to work constructively with regulators around the world,” it said.

The company said it has received merger clearance in Australia, Brazil, Canada, South Africa and Taiwan.

“Broadcom is confident that when regulators conclude their review, they too will see that the combination of Broadcom and VMware will enhance competition in the cloud,” it said.

It will also “benefit enterprise customers by giving them more choice and control over where they locate their workloads”. AFP