EU Antitrust likely to Issue Warning to Broadcom on $61 billion VMware deal

EU Antitrust likely to Issue Warning to Broadcom on $61 billion VMware deal

European Union (EU) Antitrust regulator is set warn the Broadcom- U.S. chipmaker about the possible anti-competitive effects of its proposed $61 billion bid for cloud computing company- VMware.

The European Commission probed in December 2022, stating the deal, announced last year, would allow Broadcom to restrict competition in the market for certain hardware components which interoperate with VMware's software.

In a statement of objections, the Commission will frame the concerns regarding the deal. Companies are granted with the liberty to ask for a closed hearing to defend their deals in front of Senior Commission and national competition officials as well as rivals and the Commission's lawyers.

Broadcom is likely to propose remedies once it receives the EU charge sheet and not before that, with no asset sale foreseen.

According to Broadcom, it would continue its "constructive work" with the Commission. The deal has received the green light in Brazil, South Africa and Canada, while the UK competition watchdog is investigating the acquisition.

The company said, "we continue to expect the transaction will close in Broadcom's fiscal year 2023."

The two companies received a "second request" for information about their deal from the U.S. Federal Trade Commission in July, indicating that the planned transaction would be closely scrutinized, according to a government filing.

U.S. antitrust enforcers have sought to stop an unusually large number of deals during the Biden administration because of concerns over concentration in the U.S. economy.

Broadcom has communicated to EU enforcer that the presence of Amazon, Microsoft and Google shows that there is still strong competition existing in the cloud computing market.