EU to Probe Broadcom’s $61 Billion Planned Takeover of VMware

European regulator says it is concerned that the deal could limit competition for some hardware

· European Commission, which leads the EU’s antitrust enforcement, said it is concerned the deal would allow Broadcom to restrict competition

· VMware’s software to interoperate with competitors’ hardware

The European Union’s antitrust watchdog said on Tuesday that it would open an investigation into chip maker Broadcom planned $61 billion acquisition of VMware.

The European Commission, which leads the EU’s antitrust enforcement, said it is concerned the deal would allow Broadcom to restrict competition in the market for certain hardware components.

The deal has also attracted attention from other regulators. The U.K.’s Competition and Markets Authority has said it is looking into the planned acquisition. The U.S. Federal Trade Commission has been seeking information about the deal from the companies, citing a previous regulatory filing.

Broadcom said it looked forward to continuing to work with European regulators as part of their review process.

“The combination of Broadcom and VMware is about enabling enterprises to accelerate innovation and expand choice,” a Broadcom spokesman said. “We are confident that regulators will see this when they conclude their review.”

VMware said the deal would offer the companies’ combined customers more choice and flexibility.

The EU said in a statement on Tuesday that its preliminary examination of the deal prompted concerns about hardware components such as network interface cards and storage adapters.

For example, Broadcom could make it harder for VMware’s software to interoperate with competitors’ hardware, the commission said. It said the company could also shut out competitors by preventing them from using VMware’s software or making it harder for them to access it.

“This, in turn, could lead to higher prices, lower quality and less innovation for business customers, and ultimately consumers,” the commission said.

The commission said it would also look into whether Broadcom could hinder the development of smart network interface cards by other providers or start bundling its software with VMware’s software in a way that limits customer choice.

The European Commission will have until May to make a decision on the merger.

The deal to buy VMware would further Broadcom’s push into software, nearly tripling the size of the company’s software division.

Broadcom Chief Executive Hock Tan said in a recent call with analysts that the company is expecting an extended period of reviews of the planned VMware acquisition in multiple jurisdictions. He said he expects the reviews to finish in the company’s 2023 fiscal year, which runs through October.