Belgium, (Brussels Morning Newspaper) The European Commission launched an investigation into US semiconductor manufacturer Broadcom’s bid to take over cloud computing company VMware.
Broadcom is offering to take over VMware for USD 61 billion, with the EC expressing concern that the move could jeopardize competition, according to Reuters reporting on Tuesday.
“The Commission is particularly concerned that the transaction would allow Broadcom to restrict competition in the market for certain hardware components which interoperate with VMware’s software,” the EC noted in a statement.
The Commission was preparing to launch an investigation into the takeover earlier this month, noting that it is the second largest this year.
According to the EC, preliminary investigations showed that the takeover may put Broadcom in the position where it could restrict competition by making VMware software less interoperable with competitors’ hardware.
The Commission warned that the takeover could result in lower quality of products, higher prices and less innovation, which is not in the interest of consumers.
The body noted that it will decide on the matter by 11 May next year.
Broadcom optimistic
Broadcom announced on Tuesday it would continue to cooperate with the EC and noted that it expects to wrap up the takeover next year.
The company pointed out that it received regulatory approval for the takeover in Brazil, Canada and South Africa, and investment clearance in Austria, France, Germany and Italy.
“The combination of Broadcom and VMware is about enabling enterprises to accelerate innovation and expand choice by addressing their most complex technology challenges in this multi-cloud era, and we are confident that regulators will see this when they conclude their review,” Broadcom noted in a statement.
According to sources familiar with the process, Broadcom is hoping that competition with US tech giants Amazon, Google and Microsoft will encourage the EC to approve the takeover.
Broadcom’s plan to take over VMware has come under increased scrutiny as regulators around the world start to take action against tech giants.
IT business user associations from Belgium, France, the Netherlands and Germany – Beltug, Cigref, Nederland and Voice – previously warned that the takeover could lead to higher prices and lower quality of products.
