UK regulator becomes latest to assess Broadcom's $61bn VMware deal

In a fresh blow to vendor's M&A ambitions, the CMA regulator is assessing whether the merger amounts to a "substantial lessening" of competition

The Competition Markets Authority has stepped in to probe whether US chipmaker Broadcom's $61bn acquisition of cloud computing company VMware will dull competition in the market.

The CMA said this week that the investigation of the merger will look into whether or not it will result in a "substantial lessening" of competition within any market or markets in the UK for goods or services.

"The CMA has decided to investigate this transaction and is inviting comments from any interested party," the watchdog said in a statement.

Invitation to comment closes December 6.

Broadcom has been contacted for comment.

Broadcom's shaky M&A history

We heard earlier this month that the European Commission is also scrutinising the deal, with an expected decision by December 20.

The takeover, which was first announced in May, has been dubbed the second biggest in the channel so far this year.

However, the blockbuster buy has been met with backlash since its announcement following Broadcom's wobbly history with major acquisitions.

Its $10.7bn acquisition of Symantec in 2019 sparked concern from the channel for its narrowing of focus to just the enterprise and taking large customers direct.

After the news broke that Broadcom intended to snap up VMware, the cloud computing group's partners told CRN they had mixed feelings.

Wanstor CTO Richard Kuczma felt the company looking to acquire VMware is "bad news" for VMware customers.

On the other hand, distributor Westcoast's MD Alex Tatham said the deal "makes a lot of sense" following Broadcom's previous acquisitions.

"They really collected a whole range of pretty enterprise led software businesses, so clearly they've been an acquirer of software assets," he Tatham said.

"It makes quite a lot of sense for a chip company to diversify a little."

Meanwhile, chief analyst at Canalys Alastair Elms said Broadcom's history of handling acquisitions is one of the biggest worries for partners.

"There is a real cause for concern - Broadcom's history of stripping costs out of CA and Symantec and focusing the businesses on direct enterprise customers will be a worry for partners," he said.

"It sounds like Broadcom plans to expand that direct sales model to around 1,500 VMware accounts, many of whom are currently served by VMware large resellers and GSIs.

"Broadcom claims it will leave the rest of the business to the channel but Broadcom doesn't have a great track record here. There are real fears, based on what's happened at Symantec, that Broadcom doesn't place enough value on a channel model."