Broadcom-VMware deal will enter a 'phase two' investigation , CMA announces
The CMA is investigating on the basis that the merger could restrict competition in the UK
The UK regulator is moving forward with a ‘phase two' investigation into the $61bn-deal between Broadcom and VMware.
The move comes as Broadcom refused to provide undertakings of the deal requested by the CMA during phase one of the investigation.
The regulator appointed an inquiry group on 29 March that will take a "deeper" look into the deal.
Chipmaker Broadcom and cloud computing group VMware had already mutually agreed to extend the outside date of the pair's $61bn merger by 90 days.
The CMA became the latest regulator to open assessment over the deal last November 2022 citing concerns of a "substantial lessening of competition".
In a statement, the watchdog said: "The CMA has decided to investigate this transaction and is inviting comments from any interested party."
The European Commission also opened an "in depth" investigation of Broadcom's $61bn purchase of VMware in December 2022 over concerns that Broadcom could turn off rivals' access to the virtualisation all-star once the acquisition deal closes.
"Our initial investigation has shown that it is essential for hardware components in servers to interoperate with VMware's software," said Margrethe Vestager, European Commission executive vice president in charge of competition policy, in a statement.
"We are concerned that after the merger, Broadcom could prevent its hardware rivals to interoperate with VMware's server virtualisation software. This would lead to higher prices, lower quality and less innovation for customers and consumers."
Soon after the announcement of the deal, US Federal Trade Commission was one of the first to reveal they were taking a deeper "second request" look at the merger.
In response to these announcements, a spokesperson from Broadcom made a statement that the vendor is confident that regulators will conclude the deal will"accelerate innovation and expand choice."
CRN has approached Broadcom for comment.
Broadcom and VMware - the background
The takeover was first announced in May 2022 and was dubbed the second biggest in the channel last year.
However, the blockbuster purchase was also met with backlash following Broadcom's wobbly history with major acquisitions.
Its $10.7bn acquisition of Symantec in 2019 sparked concern from the channel after the vendor took some large customers direct, and narrowed its focus to just the enterprise market.
Any developments in the merger's progress will be watched closely by partners, some of which have expressed concerns around Broadcom's commitment to developing VMware, its channel strategy and pricing.