BRUSSELS, Dec 20 (Reuters) – The European competition authority has opened an in-depth investigation into the proposed acquisition, for 61 billion dollars (57.39 billion euros), of the cloud computing services provider VMware by US semiconductor maker Broadcom, the European Commission said on Tuesday.
“The Commission is particularly concerned that the transaction would allow Broadcom to restrict competition in the market for certain hardware components that interact with VMware software,” the Commission said in a statement.
Reuters reported on December 9 that the Commission was ready to open a full investigation into the operation, the second largest globally since the start of the year.
The Commission said that, according to its preliminary investigation, the transaction could allow Broadcom to restrict competition for the supply of certain components. It points to the risk of degradation of interoperability between VMware software and competitors’ hardware, to the benefit of Broadcom’s.
This factor, along with others, could lead to higher prices, lower quality and less innovation for business customers and, ultimately, consumers, the Commission said.
The Commission now has 90 working days, i.e. until May 11, 2023, to make a decision.
Broadcom had been banking on a quick EU approval of the deal by pointing to competition from Amazon, Microsoft and Google in the cloud computing market, people familiar with the matter told Reuters in October.
Broadcom said earlier this month that it was confident the deal would close and be completed in fiscal year 2023. Brush)