The UK Competition and Markets Authority has opened a preliminary investigation into Broadcom’s proposed acquisition of VMware.
A Monday Notice The Authority says the inquiry will consider whether the transaction constitutes a “relevant merger situation” within the meaning of the Enterprise Act 2002 and, if so, “whether the creation of that situation is likely to lead to a significant reduction in competition within one or more UK markets for goods or services.”
That Law offers a two-pronged test to identify a “relevant merger situation”:
- The UK turnover value of the Acquired Business exceeds £70m (the “Sales Test”); or
- The concentration would result in the creation or increase of at least a 25 per cent share of the supply of goods or services in the United Kingdom or a substantial part of the United Kingdom (the ‘share of supply’ test).
A combined VMware and Broadcom almost certainly meets both thresholds with the virtualization…