Broadcom’s $61 billion deal to acquire VMWare has received approval from the UK’s Competition and Markets Authority (CMA) after an extensive investigation. The CMA determined that the deal would not have a significant impact on competition in the supply of server hardware components in the UK.

During the initial Phase 1 investigation, the CMA identified concerns about competition, prompting the deal to be referred to a Phase 2 inquiry. In the Phase 2 probe, the CMA found that any potential financial benefit to Broadcom and VMWare from making rival products less compatible with VMWare’s software would not outweigh the potential cost in terms of lost business.

The CMA also assessed the potential harm to innovation resulting from the deal. However, it concluded that this was unlikely to be a concern since information about new product adaptations would only be shared with VMWare at a stage when it would no longer provide a commercial benefit to Broadcom.

Richard Feasey, chair of the independent panel, emphasized the importance of thoroughly scrutinizing deals like this to ensure they do not harm competition in the UK, even if the UK market represents a small proportion of total sales in a merger. Feasey stated, “we have concluded the deal can go ahead” after careful consideration of the evidence and finding no competition concerns.

In July, the European Commission (EC) formally approved Broadcom’s $61 billion acquisition of VMWare with certain conditions. Broadcom maintains a strong position in the market for the supply of specific hardware components, while VMWare is a leading provider of server virtualization software.

The deal is currently being investigated by the Federal Trade Commission (FTC) in the United States.

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