July 20, 2023

CMA grants provisional approval of Broadcom/VMware deal

Days after the European Commission completed its review of the proposed acquisition of VMware, Inc. by Broadcom, Inc.,  the UK Competition and Markets Authority has also granted provisional approval of the deal.  Broadcom, based in San Jose, California, makes hardware components used in computer servers.  VMware, headquartered in Palo Alto, California, sells virtualization software that enables the processing power of a single server to be segmented, allowing more efficient use of the server’s capacity.  Hardware and software companies share information about new products to ensure compatibility.

The CMA began investigating in November 2022, announcing the launch of its Phase 1 merger inquiry in January 2023.  In March 2023, the CMA referred the proposed acquisition for an in-depth (Phase 2) investigation, having found that the merger could result in a substantial lessening of competition within a market or markets in the United Kingdom.  The CMA considered two theories of harm through which the proposed merger could give rise to a substantial lessening of competition:

  1. Whether the merged entity could harm the competitiveness of competing manufacturers of components requiring interoperability with VMware’s software – specifically network-interface cards, fiber channel host-bus-adapters, storage adapters, and fiber channel switches.
  2. Whether, by virtue of the merger, the Broadcom division that supplies the interoperable hardware could have access to commercially sensitive information from competitors in the hardware market, potentially weakening the incentive to innovate.


The CMA concluded that neither theory of harm was likely to become a reality as a result of the merger:  the merged entity would not have an incentive to reduce interoperability between competitors’ hardware and VMware’s virtualization software, and furthermore, the length of the innovation cycle and the involvement of industry standards bodies would limit any effect on incentives to innovate.

Valued at $69 billion, the proposed merger is the largest ever investigated by the CMA.  Interested parties have until August 9, 2023 to submit responses to the provisional findings.  The CMA will issue its final report by September 12, 2023.

CMA press release | Notice | Summary of provisional findings