The European Commission has approved, under the EU Merger Regulation, the proposed acquisition of VMware by Broadcom.
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The approval is conditional upon full compliance with the commitments offered by Broadcom.
Broadcom is a hardware company that offers, among other products, Fibre Channel Host-Bus Adapters (‘FC HBAs'), storage adapters and Network Interface Cards (‘NICs'), which are hardware components that connect servers to storage or network.
Broadcom has recently started expanding into software markets, mainly for security and mainframe applications.
VMware is a software supplier offering mainly virtualization software that interoperates with a wide range of hardware, including FC HBAs, storage adapters and NICs.
The Commission's preliminary market investigation found that, by acquiring VMware, Broadcom could have restricted competition in the markets for the supply of NICs, FC HBAs and storage adapters.
The Commission's in-depth investigation confirmed that the transaction, as initially notified, would harm competition in the worldwide market for the supply of FC HBAs.
At the same time, it ruled out possible competition concerns related to: the market for the supply of NICs and storage adapters, the market for the development of SmartNICs; and (iii) the bundling of Broadcom's virtualisation software with VMware's.
To address the Commission's competition concerns in the worldwide market for the supply of FC HBAs, Broadcom offered the following comprehensive access and interoperability commitments to Marvell and to any potential future entrant:
• Guaranteed access to the interoperability Application Programming Interfaces as well as to the materials, tools and technical support necessary for the development and certification of third-party FC HBAs.
It also committed to ensuring their interoperability with VMware's server virtualisation software; and, third parties' access to this information at the same time as Broadcom.
• Guaranteed access to the source code for all of Broadcom's current and future FC HBA drivers through an irrevocable open source license.
This would allow Marvell and any potential entrant to ensure interoperability with VMware's server virtualisation software and allow them to reuse and modify Broadcom's drivers for its own use.
Furthermore, Broadcom committed to implementing an organisational separation between the team working on Broadcom's FC HBAs and the team in charge of third-party certification and technical support.
It also committed to ensuring protection of confidential information of Marvell and any potential entrant obtained in the context of the interoperability and certification processes. ■