US chipmaker Broadcom [AVGO:US] is set to face a setback in its USD61bn deal to acquire cloud computing firm VMware [VMW:US] as EU antitrust regulators intend to launch a full-scale investigation into the bid, as reported by Reuters on December 9. The EU competition watchdog will decide by December 20 whether to approve the deal. The commission can conduct a four-month investigation if it has serious concerns. Broadcom believes that this deal does not lead to any competition issues and looks forward to working with the European Commission throughout this process. According to the company, it is still confident that this transaction will be completed in FY23. 

This is Broadcom’s second-largest acquisition globally so far this year, with an aim to diversify its businesses and switch to enterprise software. Meanwhile, global regulators are increasing the scrutiny of transactions by large technology companies due to concerns over power being concentrated in a few giants, along with the possibility of bigger companies acquiring start-ups only to shut them down. Moreover, Beltug, the largest Belgian association of CIOs & Digital Technology leaders, and its counterparts including France’s Cigref, CIO association Nederland, and VOICE Germany also expressed concerns about the deal, worrying that the VMware deal could lead to drastic price hikes and tougher commercial practices against customers.

Sources:

https://www.reuters.com/markets/deals/broadcom-faces-eu-antitrust-probe-into-61-bln-vmware-deal-sources-2022-12-09/

https://www.reuters.com/markets/deals/broadcom-seeks-eu-antitrust-approval-61-bln-vmware-buy-2022-11-15/