VMware Acquisition Faces Scrutiny: Price Reductions Possible, Says Industry Advocate
A potential challenge to the European Commission’s decision regarding Broadcom’s acquisition of VMware could lead to lower prices for users and a return to pre-acquisition terms, according to a leading industry group. The dispute centers not on Broadcom’s actions directly, but on the original regulatory approval granted by the Commission.
The controversy stems from concerns about pricing following Broadcom’s completion of the $61 billion VMware takeover in November 2023. A senior official with the Cloud Infrastructure Services Providers in Europe (CISPE) dismissed anxieties that any Commission action would result in a fine levied on Broadcom, subsequently passed on to consumers through increased costs. “I’m not sure that a fine is a likely consequence. This isn’t an action against Broadcom; this is against the European Commission’s decision,” the official stated.
Potential for Price Rollbacks
If the challenge proves successful, VMware users “may well see a reduction in prices and a return to the terms before the acquisition,” the CISPE representative explained. “I certainly can’t see the action leading to higher prices for VMware users. Most users are already paying a higher price.” This suggests a widespread perception that costs have risen since Broadcom took control.
However, navigating the legal process will likely be protracted. Cases before the General Court are known for their lengthy timelines. Despite this, the CISPE official expressed optimism for a relatively swift resolution, acknowledging that “quickly” is a relative term within the European legal system. The group anticipates the matter being referred back to the General Court within the first six months of 2025, with a final decision potentially reached within two years.
Broadcom Defends Acquisition Approval
Broadcom vehemently disputes the allegations put forth by CISPE. According to a company release, the European Commission, alongside twelve other global regulatory bodies, thoroughly vetted and approved the VMware acquisition. “We will uphold the commitments made to the Commission at that time,” a company spokesperson affirmed.
The situation highlights the ongoing tension between regulatory oversight and the practical impact of large-scale tech mergers. While Broadcom maintains it has adhered to all required commitments, the concerns raised by CISPE underscore the potential for unforeseen consequences and the importance of continued scrutiny.
