The European Commission has opened an in-depth investigation to assess, under the EU Merger Regulation, the proposed acquisition of VMware (VMW) by Broadcom (AVGO). The Commission says it "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 Commission said in a statement that its "preliminary investigation indicates that the transaction may allow Broadcom to restrict competition in the market for the supply of NICs, FC HBAs and storage adapters by: degrading interoperability between VMware’s server virtualization software and competitors’ hardware to the benefit of its own hardware, and/or foreclosing competitors’ hardware by preventing them from using VMware’s server virtualization software or degrading their access to it. This, in turn, could lead to higher prices, lower quality and less innovation for business customers, and ultimately consumers." The Commission added that it will also examine whether Broadcom may hinder the development of SmartNICs by other providers. In 2020, VMware launched Project Monterey with three SmartNICs sellers — NVIDIA (NVDA), Intel (INTC) and AMD Pensando (AMD). "Broadcom may decrease VMware’s involvement in Project Monterey to protect its own NICs revenues. This could hamper innovation to the detriment of customers," the Commission writes. Further, it believes "Broadcom may start bundling VMware’s virtualization software with its own software and no longer offer VMware’s virtualization software as a stand-alone product reducing choice and potentially foreclosing rival software providers." The proposed transaction was notified to the Commission on 15 November 2022. The Commission now has 90 working days, until 11 May 2023, to take a decision. Reference Link
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