UK approves Broadcom-VMware deal

CMA's move comes one week after European Commission gave its approval

The UK's Competition and Markets Authority (CMA) has approved the Broadcom-VMware merger, regulators announced on Wednesday.

"We have provisionally concluded that the anticipated acquisition of VMware by Broadcom may not be expected to result in a substantial lessening of competition in relation to the supply of I/O hardware and switches in the UK," the London-based agency wrote.

Their decision comes one week after the European Commission granted its approval, albeit with several conditions attached, for Broadcom in order for the chip maker to win approval.

The $61 billion megamerger, one of the largest in tech history, has now passed regulators in Canada, Brazil, South Africa, the European Union, but has not passed in the US.

In the US, the Federal Trade Commission (FTC) is more than a year into a deep dive "second request" investigation that began on 11th July, 2022.

Broadcom announced the $61 billion acquisition on 26th May, 2022.

Since then, authorities around the globe have taken a hard look at whether the combination would hurt Broadcom competitors who rely on VMware's virtualization of infrastructure to run their business.

The European Commission focused on the fibre channel host bus adapter market, and Broadcom competitor Marvell, which it determined could be harmed if it lost access to VMware.

To mitigate this, Broadcom has agreed to several concessions to assure its good behaviour. First it will give Marvell real-time access to VMware updates and developments, it will appoint an independent monitor to ensure good behaviour and in the event of a conflict, the company had agreed to a fast-track dispute resolution process.

This is the second monitoring agreement that Broadcom is operating under in Europe. In 2021, authorities there placed Broadcom on seven-year probationary period that gives regulators access to its books, after an investigation uncovered ab illegal discount scheme carried out by the chipmaker.

The move by the UK CMA comes two months after a demand letter was sent by regulators asking Broadcom to explain how it could mitigate its effects of the sale.

In its letter yesterday, the CMA disposed of its fears saying its investigation found they were unwarranted, but has left the door open for challenges to the merger until 9th August.

"The competition in markets authority has provisionally found that the anticipated acquisition of VMware by Broadcom may not be expected to result in a substantial lessening of competition in relation to the supply of various server hardware components in the UK," the agency wrote.

VMware's stock price, which for a year were beneath the $142.50 premium Broadcom is offering, have risen dramatically since rumours began to swirl that the merger might pass regulators. Shares hit a 52-week high of $167.37 on Wednesday morning.

This article was first published in CRN.