Broadcom faces EU antitrust investigation into $61 billion VMware deal

Author: Foo Yun Chee

BRUSSELS (Reuters) – U.S. chipmaker Broadcom will face a setback in its $61 billion bid for cloud computing company VMware, with EU antitrust regulators poised to launch a full investigation into the deal, people familiar with the deal say thing.

The proposed acquisition, the world’s second-largest this year, underscores Broadcom’s efforts to diversify its business into enterprise software, but comes as regulators around the world step up scrutiny of Big Tech deals.

Broadcom had hoped for early EU approval of the deal, pointing to competition from Amazon, Microsoft and Google in the cloud computing market, people familiar with the matter told Reuters in October.

Earlier this week, the people said, the company held a so-called meeting with European Commission officials about the current state of affairs.

EU officials typically air their concerns at such meetings, and if companies fail to convince them of the merits of the takeovers, they launch a four-month, full-scale investigation after completing an initial review of the deal.

The EU’s competition enforcement authority, which is scheduled to complete its preliminary review of the deal on December 20, declined to comment.

Broadcom said it anticipates the timeline for the review process will be extended in other key regions due to the size of the deal.

“That said, we remain confident that this transaction will be consummated and completed in fiscal year 2023,” the company said.

The Belgian association of CIOs and digital leaders and its French counterparts, Cigref, the CIO Nederland platform and VOICE Germany have previously expressed concerns that the deal could lead to drastic price increases and tougher commercial practices towards customers.

They also warned about the costs and three-to-five-year period required to switch from VMware to a competitor, making it unacceptable for some customers.

(Reporting by Foo Yun Chee; Editing by Susan Fenton)