On Tuesday, the European Union has opened a detailed investigation into U.S. chipmaker Broadcom’s proposed $61 billion bid for cloud computing company VMware.
In a statement, the Commission said, “The Commission is particularly concerned that the transaction would allow Broadcom to restrict competition in the market for certain hardware components which interoperate with VMware’s software.”
On December 9, it was reported that the Commission was set to open a full-scale probe into the deal, the second biggest globally so far this year.
The Commission said its preliminary investigation indicates the transaction may permit Broadcom to restrict competition for the supply of certain components by degrading convergence between VMware software and competitors’ hardware to the benefit of its own hardware.
According to the commission, several other factors could lead to higher prices, lower quality and less innovation for business customers, and ultimately consumers.
The Commission now has 90 working days, until May 11, 2023, to take a decision.
On Tuesday, Broadcom reiterated that it continued to expect the transaction would close in its fiscal year 2023, adding it would continuing to work with the European Commission.