UK regulator cuts close to Broadcom-VMware merger deadline

The CMA aims to issue its report two months before Broadcom closes the deal

The UK's Competition and Markets Authority (CMA) has published a timetable and an Issues Statement on Broadcom's planned $61 billion takeover of VMware, outlining its concerns with the move.

The timetable [pdf] sets a deadline of 9th May for submissions and includes hearings in June and July/August to discuss potential remedies.

The Authority aims to deliver a final report on the matter in late August, while Broadcom has set a deadline of 31st October to complete the acquisition.

This means there will only be two months (between late August and late October) for Broadcom to address any regulatory objections and meet its self-imposed deadline for deal completion.

The Issues Statement [pdf] defines the investigation's parameters and presents initial theories on the potential impact on competition.

The CMA has identified three "theories of harm" in its preliminary assessment. They including the potential for the exclusion of hardware rivals, by Broadcom leveraging VMware's dominance in server virtualisation software; non-horizontal effects from the sharing of commercially sensitive information; and the exclusion of server virtualisation software competitors through leveraging Broadcom's position in fibre channel host bus adapters (FC HBAs) and storage adapters.

The CMA plans to assess the potential negative impact on competitors resulting from the obstruction or elimination of interoperability between VMware's server virtualisation software and hardware products supplied by Broadcom's rivals.

Given the significance of interoperability, the CMA aims to investigate the effects of any degradation or prevention on the competitiveness of these rivals.

The CMA also plans to examine whether the acquisition would incentivise Broadcom or its rivals to engage in uncompetitive behaviour.

Broadcom is best known for its chip business, where it designs and manufactures semiconductors for modems, Wi-Fi and Bluetooth chips used in a variety of products.

VMware, on the other hand, has long been considered one of the most important players in the cloud computing sector. Its services are used by large companies to manage private and public cloud networks, as well as data centres.

Broadcom announced its plan to acquire VMware last May. The CMA subsequently announced a preliminary inquiry in November.

Last month, the CMA asked Broadcom to present proposals to address its concerns within five days.

Broadcom says it is cooperating with the CMA, and still expects the deal to be concluded within the original time frame.

Broadcom has also reported progress with regulators around the world, having received legal clearance from Australia, Brazil, Canada and South Africa.

The European Commission objected to the proposed acquisition, citing concerns about competition.

The US Federal Trade Commission (FTC) is also keeping a close eye on the deal and has scheduled two meetings, on 25th April and 1st May.