According to the UK’s Competition and Markets Authority (CMA), Broadcom’s planned $61 billion acquisition of VMware would allow it to undermine the ability of rival hardware providers to work effectively.
The markets watchdog also warned that the deal could result in higher network interface card (NIC) and storage adapter prices.
“The CMA took into account evidence that, if faced with interoperability issues using non-Broadcom hardware components in their servers, most VMware customers would find it easier to switch to using Broadcom hardware rather than to switch from using VMware to its rivals,” the CMA said on March 22.
The regulator has given Broadcom five days to respond to these concerns. If they fail to do so, the CMA could potentially pass this on to Phase 2 investigation, which would look more carefully into the issues surfaced in the initial findings.
This is only the latest probe into this mega deal. In December, the EU announced that it too had similar concerns about the impact of the combined companies on competition and was investigating further.
Broadcom responded that they are working to resolve the CMA’s concerns. “We are working constructively with the CMA as it continues its standard merger review process and are confident we will address any concerns. We will demonstrate that the transaction enhances competition and benefits businesses and consumers through increased quality, innovation and choice. We are making progress with our various regulatory filings around the world, having received legal merger clearance in Australia, Brazil, South Africa and Canada,” a company spokesperson told TechCrunch.