- Broadcom Ltd.
- 21 August 2023 14:22:53
Source: Sharecast
The CMA previously raised concerns during its phase one investigation about the potential implications the merger could have on competition within the industry, and so escalated it to a more comprehensive phase two inquiry.
It said that the investigation, carried out by an independent panel, took into account new evidence and input from stakeholders.
The provisional findings indicated that the merger between Broadcom and VMware was unlikely to curtail competition significantly in the UK's server hardware components market.
One of the main concerns revolved around the possibility that the integrated company could deliberately decrease the compatibility of rival products with VMware's server virtualisation software.
However, the investigation determined that any potential monetary gains from such a move would not justify the financial losses due to decreased business.
In addition to the compatibility concerns, the panel also delved into the potential impacts on industry innovation.
Specifically, the investigation centred on whether competitors of Broadcom might be compelled to share commercially-sensitive data with VMware, ensuring harmonious operation between their hardware and VMware’s software.
There was apprehension about Broadcom having undue access to such valuable information post-acquisition.
However, the panel deduced that the timing of sharing such product adaptation details with VMware would be too late to offer any competitive advantage to Broadcom.
Having taken into consideration the public's responses to its preliminary findings, the panel had now solidified its stance, and confirmed that the merger between Broadcom and VMware did not pose a significant threat to competition.
“Broadcom and VMware are US-based companies supplying hardware and software used by thousands of businesses and public bodies in the UK,” said Richard Feasey, chair of the independent panel carrying out the phase two inquiry.
“Even if the UK market represents a small proportion of total sales in a merger, the CMA’s job is to scrutinise deals like this thoroughly to ensure they don’t harm competition in the UK.
“In this case, having carefully considered the evidence and found no competition concerns, we have concluded the deal can go ahead.”
Reporting by Josh White for Sharecast.com.
