Korea’s antitrust body grants conditional OK to Broadcom-VMware deal

South Korea’s antitrust regulator on Monday granted conditional approval for US smartphone components maker Broadcom Inc.’s proposed purchase of VMware Inc., a US infrastructure software firm.

In May 2022, Broadcom announced a deal to acquire VMware for $61 billion in cash and stocks, plus the assumption of $8 billion in net VMware debt. The deal requires approval from regulators in major countries where the two companies do business with their partners, including South Korea and China.

Korea’s Fair Trade Commission (KFTC) said the deal could affect fair competition in the market.

Cloud software provider VMware is the industry leader in the cloud computing and virtualization technology sector, playing a significant role in certifying related components.

“We have concluded that VMware could take advantage of its position to delay or obstruct interoperability certifications for parts produced by Broadcom’s competitors,” said the KFTC.

The Korean antitrust body also took note of Broadcom’s dominant position in the Fiber Channel Host-Bus Adaptor (FC HBA) market. FC HBA enables connectivity and data transfer between devices in an FC-based storage area network.

CONDITIONS ATTACHED

To prevent possible unfair practices, the Korean commission said it has requested that Broadcom guarantee interoperability for competitors and new businesses over the next 10 years.

The regulator also asked Broadcom to provide source codes for the FC HBA when requested by a third party for interoperability.

The KFTC asked Broadcom to come up with detailed measures to comply with the conditions within 60 days.

Last month, the regulator imposed 19.1 billion won ($14.3 million) in fines on Broadcom for its unfair business practices with Samsung Electronics Co.

In an unrelated move, Samsung said in August it partnered with VMware to strengthen its competitiveness in the next-generation solid-state drive (SSD) storage device market.

Write to Sul-Gi Lee at surugi@hankyung.com

In-Soo Nam edited this article.