Broadcom's proposed $61 billion acquisition of VMware could make servers more expensive, potentially driving up the cost of network services, according to the UK Competition and Markets Authority.
The CMA’s investigation focused on six products sold by Broadcom (Ethernet NICs, Smart NICs, Fibre Channel Host Bus Adapters (FC HBAs), storage adapters, FC switches and top-of-rack (TOR) switching chips) and VMware’s server virtualisation software.
In its evaluation of the proposed merger, the CMA found that "VMware has a leading position in server virtualisation software and that compatibility with its software is critical for the server hardware components sold by Broadcom and its rivals."
The CMA said it "is concerned that the deal could enable Broadcom to harm its rivals by preventing them from being able to supply VMware-compatible hardware components – such as NICs and storage adapters – reducing competition and ultimately choice for customers."
Broadcom now has five days to respond to the CMA or the case will proceed to a Phase 2 investigation.
