UK monopoly watchdog gives Broadcom-VMware probe a tight timetable

If the news is bad for chip giant, a remedy will need to be found very quickly indeed

The UK Competition and Markets Authority (CMA) has detailed its concerns about Broadcom's acquisition of VMware, plus a roadmap that would leave around two months to sort out any regulatory objections to the deal if Broadcom is to meet its self-imposed October 2023 deadline for the deal.

The CMA on Friday updated its investigation of the deal with publication of an administrative timetable and an issues statement.

The timetable [PDF] calls for submissions by May 9, hearings in early June, more hearings to discuss any remedies in July and August, and delivery of a final report in "late August."

Broadcom has given itself a deadline of October 31 to finalize the deal. If the CMA has big problems with the deal, there's not much time between late August and late October to sort them out – especially if those problems remain after the talks from June to August.

At least the talks will be narrower than might have been the case. The CMA's first look at the deal considered three "theories of harm" – namely:

  • Foreclosure of hardware competitors through leveraging VMware's position in server virtualization software;
  • Non-horizontal effects from commercially sensitive information sharing;
  • Foreclosure of server virtualization software competitors through leveraging Broadcom's position in FC HBAs and storage adapters.

The Issues Statement [PDF] doesn't consider the third, and the CMA removed consideration of SmartNICs from the first.

But that still leaves plenty for the CMA to consider, and it intends to seek evidence on "whether degrading (or preventing) interoperability between VMware server virtualization software and the products supplied by Broadcom's hardware rivals would harm rivals' competitiveness due to the importance of interoperability."

On the question of commercial sensitive information (CSI) flows, the CMA will try to understand whether VMware currently has access to CSI of Broadcom's hardware competitors, and if Broadcom would be able to see that info if it does not acquire Virtzilla, and if that flow of information would mean Broadcom enjoys an advantage over its rivals.

Also on the agenda is whether the acquisition would lead to Broadcom, or its competitors, believing they "have the incentive to compete less aggressively."

It's a lot to think about.

Further speculation about the deal has been provoked by the US Federal Trade Commission (FTC), which is also considering the deal, listing two meetings on April 25 and May 1. While the FTC does not publish agendas for those meetings, it has a limited number of matters to consider and it is likely that the VMware/Broadcom deal will be discussed – if not at both meetings, then likely at one.

Broadcom continues to insist that the deal will be done on time, and VMware doesn't disagree.

However, speculators are reportedly less confident the deal will happen on any timeframe.

If that happens, it will leave Broadcom's strategy of building a giant enterprise software business in tatters and force VMware to go it alone.

The Register has made several requests for an interview with Broadcom to discuss its strategy for VMware, but the megacorp has not acknowledged them. It has, however, published articles stating its belief that multicloud and cloud native software development will be of great importance, and acquiring VMware is emblematic of that belief. ®

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