news/AVGO/2023.02.27/Broadcom faces EU antitrust warning on $61 bln VMware deal - sources.txt

BRUSSELS, Feb 27 (Reuters) - U.S. chipmaker Broadcom
is set to receive a European Union antitrust warning
about the possible anti-competitive effects of its proposed $61
billion bid for cloud computing company VMware in the
coming weeks, people familiar with the matter said.The European Commission opened an investigation in December,
saying the deal, announced last year, would allow Broadcom to
restrict competition in the market for certain hardware
components which interoperate with VMware's software.The EU competition enforcer, which will decide on the deal
by June 7, declined to comment.Tech M&A deals have attracted more intense scrutiny on both
sides of the Atlantic recently as regulators worry about giant
companies acquiring smaller, more innovative rivals.The Commission will set out its concerns in a statement of
objections, the people said. Companies can subsequently ask for
a closed hearing to defend their deals in front of senior
Commission and national competition officials as well as rivals
and the Commission's lawyers.Broadcom is expected to offer remedies only after receiving
the EU charge sheet and not before that, with no asset sale
foreseen, one of the sources said.Broadcom said it would continue its "constructive work" with
the Commission. The deal has received the green light in Brazil,
South Africa and Canada, while the UK competition watchdog is
investigating the acquisition."We continue to expect the transaction will close in
Broadcom's fiscal year 2023," the company said.The two companies received a "second request" for
information about their deal from the U.S. Federal Trade
Commission in July, indicating that the planned transaction
would be closely scrutinized, according to a government filing.U.S. antitrust enforcers have sought to stop an
unusually large number of deals during the Biden administration
because of concerns over concentration in the U.S. economy.Broadcom has told the EU enforcer that the presence of
Amazon, Microsoft and Google shows
that there is strong competition in the cloud computing market,
other people familiar with the matter told Reuters in October.Beltug, a Belgian association of CIOs & Digital Technology
leaders, and its counterparts France's Cigref, CIO platform
Nederland and VOICE Germany have said that the deal could lead
to big price increases and tougher commercial practices against
customers.
(Reporting by Foo Yun Chee, Additional reporting by Diane
Bartz; Editing by Louise Heavens, Jane Merriman and Marguerita
Choy)