British watchdog approves Broadcom's purchase of VMware
July 19 (UPI) -- Computer chip and software producer Broadcom moved a step closer to its proposed $69 billion purchase of virtualization leader VMware with the British Competition and Markets Authority clearing the deal on Wednesday.
"[The Competition and Markets Authority] has provisionally found that the potential financial benefit to Broadcom and VMware of making rival products work less well with VMware's software would not outweigh the potential financial cost in terms of lost business," the CMA said in a statement.
The agency said it also looked into how the deal could force Broadcom's rivals to share commercially sensitive information while working with VMware.
"The panel found the deal would be unlikely to harm innovation, in particular since information about new product adaptations only needs to be shared with VMware at a stage when it is too late to be of commercial benefit to Broadcom," the CMA said.
The approval leaves the Federal Trade Commission as the final puzzle piece to the large deal. The purchase remained under investigation there even as European Commission approved it earlier this month.
The purchase would allow Broadcom, which specializes in tech hardware, to break into the infrastructure software sector. The mammoth deal, though, has worried watchdogs because it could give Broadcom leverage in restricting and even degrading VMware's support for Broadcom's hardware rivals.
In May, Broadcom said its cash-and-stock deal has already been approved by the boards of both companies and would include about $8 billion in VMware debt. The agreement at the time was believed to be the second-largest tech acquisition in the United States this year, behind Microsoft's nearly $70 billion deal with Activision Blizzard.
"Computer servers -- often using the products of Broadcom and VMware -- play a critical role in enabling us to work in the office or at home or to access TV shows or use banking services," Richard Feasey, chair of the CMA's independent inquiry panel, said in a statement.
"That's why it's important we investigate this deal to ensure that U.K. businesses continue to benefit from competition and innovation in the supply of server components. After carefully considering a broad range of evidence, we have provisionally found that this deal would not harm competition."
