Broadcom’s acquisition of VMware sees legal challenge in EU

The Cloud Infrastructure Service Providers in Europe, or CISPE, filed an appeal before the European General Court challenging the European Commission’s decision to approve Broadcom’s (NASDAQ:AVGO) acquisition of VMware.

CISPE, which represents Europe’s leading sovereign cloud infrastructure providers, said it is seeking an annulment of the Commission’s approval of the deal.

CISPE said the Commission acknowledged that the acquisition posed significant risks to competition. However, the regulator failed to impose any conditions on Broadcom to prevent a concentration of dominance or to mitigate the potential abuse of such a position, the group added.

Broadcom did not immediately respond to a request for comment from Seeking Alpha.

CISPE said it is claiming errors in law and manifest failures by the Commission in the competitive assessment process which are significant enough to seek an annulment of the decision.

The group noted that it has consistently raised alarms with the European Commission over Broadcom’s unfair software licensing practices. Despite numerous meetings and thorough responses to detailed requests for information, no substantive action was taken to support either European cloud service providers or their customers, the group noted.

“The dominance of VMware software in the virtualisation market means that unfair new licensing terms enforced by Broadcom affect almost every European organisation using cloud technology,” said Francisco Mingorance, Secretary General of CISPE. “Not just cloud service providers, but hospitals, universities, and municipal authorities are all now facing unaffordable bills and rigid long-term commitments that jeopardise the flexibility and affordability of their cloud infrastructure. The Commission was warned this would happen, yet it stood by. It must now reconsider its decision.”

CISPE noted that repeated efforts by it to engage constructively with Broadcom and secure fairer access terms for its members were met with refusal and disregard.

Broadcom had completed its $69B acquisition of VMware nearly by the end of 2023.