Broadcom-VMware Deal To Win EU Clearance After Pact: Reports

The European Commission is expected to say Wednesday that it has accepted Broadcom’s concessions that VMware’s software will remain operable with rivals’ hardware, reported The Financial Times, which cited four people with knowledge of the matter.

The $61 billion deal to buy VMware is expected to win approval this week in the EU, but regulators were promised concessions that will restrain Broadcom from causing harm to the market, according to published reports.

Both the Financial Times and Bloomberg stated yesterday that the European Commission — the enforcement arm of the EU — could make the announcement public Wednesday.

The commission only greenlit the deal after it won certain behavior concessions from Broadcom, which is currently under a seven-year compliance agreement with the European Commission over past trade practices that authorities in the U.S. and Europe called “illegal.”

“The European Commission, the executive body of the EU, will say on Wednesday that it has accepted Broadcom’s concessions that VMware’s software will remain operable with rivals’ hardware, said four people with knowledge of the matter,” The Financial Times reported. “That measure has proven enough to address the concerns of competition authorities in Brussels, without the need for Broadcom to sell parts of the VMware business, these people said.”

In April, the agency, which launched an in-depth look at the merger months ago, said it feared Broadcom could use the newly acquired technology from VMware to turn off competitors’ access to the virtualization software, which may “in turn lead to higher prices, lower quality and less innovation for business customers and ultimately consumers.”

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“The Commission is concerned that Broadcom may restrict competition in the global markets for the supply of FC HBAs and storage adapters by foreclosing competitors’ hardware by delaying or degrading their access to VMware’s server virtualization software,” the commission wrote in an April 4 filing.

If the deal is announced Wednesday it could mark the beginning of a regulatory thaw for the merger, which has been mired in an FTC investigation, as well as another in-depth look by the U.K.’s Competition and Markets Authority.

In the U.S., the Federal Trade Commission declined to talk about its year-long probe of the merger when reached by CRN yesterday.

“No comment,” wrote Doug Farrar, the FTC’s director of public affairs.

When asked it it had a comment about the news, a spokesperson for VMware said “not at this time.” Broadcom did not respond to CRN’s email requesting comment by press time.

The deal has cleared governments in South Africa, Brazil, and Canada, which reserves the right to apply conditions to the merger for up to a year after it closes.