Advertisement

Channel News

FTC ‘Second Request’ Investigation Of Broadcom-VMware Deal Launches: 5 Things To Know

O’Ryan Johnson

Broadcom told CRN in a statement that it had expected the ‘second request’ by the FTC and Justice Department due to Broadcom and VMware’s size and scale.

The Federal Trade Commission has undertaken a more stringent “second request” look at Braodcom’s proposed $61 billion acquisition of VMware, a significant regulatory hurdle that has derailed other large tech mergers.

Broadcom told CRN in a statement Thursday night that it had expected this closer look by the FTC and Justice Department given the size and scale of VMware and Broadcom.

“For a transaction of this size, a second request is common practice and not unexpected,” Broadcom said in a statement it attributed to an unnamed spokesperson. “Broadcom Inc. and VMware, Inc. intend to cooperate fully with the FTC and are confident that regulatory approval will be obtained,” according to the statement.

[RELATED: Broadcom CEO Hock Tan’s Guid To Buying VMware In 30 Days]

Broadcom wrote in regulatory filings that it notified the FTC of its agreement to acquire VMware on June 10. On July 11, Broadcom and VMware were notified that the FTC would undertake a “second request” look at the deal, a review process that halts a transaction until the review is complete, according to Broadcom’s Securities and Exchange Commission filings.

“The parties may not complete the transactions until they substantially comply with the second request and observe a second 30-calendar-day waiting period, unless the waiting period is terminated earlier, or the parties commit not to close for some additional period of time,” Broadcom wrote in an SEC filing it posted last week.

Following a second review, the FTC can either allow the deal to proceed, impose conditions on the companies, or attempt to block the deal entirely by suing in federal court.

The FTC stated in a September 2021 memo that it would widen “second request” merger investigations for larger deals, with the director of the Bureau of Competition, Holly Vedova, writing that she intended to bring “ heightened scrutiny to a broader range of relevant market realities,” calling it “core to the agency’s mission.”

“To better identify and challenge the deals that will illegally harm competition, our second requests may factor in additional facets of market competition that may be impacted,” she said. “These factors may include, for example, how a proposed merger will affect labor markets, the cross-market effects of a transaction, and how the involvement of investment firms may affect market incentives to compete.”

Broadcom is no stranger to these probes. Its merger with Qualcomm was blocked in 2018 following a second request from the FTC, which eventually sued to stop that merger on national security grounds. Earlier this year, Nvidia’s deal with British chipmaker Arm collapsed after a second review resulted in the FTC filing suit to block the deal.

 
Share this
O’Ryan Johnson

O’Ryan Johnson is a veteran news reporter. He covers the data center beat for CRN and hopes to hear from channel partners about how he can improve his coverage and write the stories they want to read. He can be reached at ojohnson@thechannelcompany.com..

Advertisement
Advertisement
Sponsored Post
Advertisement

NEWSLETTER

Advertisement