CISPE is pursuing its legal action in the General Court of the European Union to overturn the European Commission’s 2023 approval of Broadcom’s acquisition of VMware, saying that the deal has harmed customers.
CISPE, the association of Cloud Infrastructure Providers in Europe, is continuing its legal fight to unwind Broadcom’s acquisition of VMware, citing the harm it is doing to VMware customers. It has just filed a response in a case it brought before a top European Court earlier this year, seeking to annul a 2023 decision to approve the merger by the European Commission, the European Union’s antitrust authority.
The Commission was one of numerous competition regulators around the world weighing in on the decision.
“The Commission looked at this merger through half-closed eyes and declared it safe. By rubber stamping the deal, Brussels handed Broadcom a blank cheque to raise prices, lock-in and squeeze customers. This was a failure of oversight by the regulator with real world costs for Europe’s cloud sector and every organization that depends upon it,” CISPE secretary general Francisco Mingorence said in a written statement.
Broadcom’s acquisition of VMware has attracted fierce criticism from VMware customers, leading as it has to some significant price rises. In an October report on the effects of the merger CISPE’s European Cloud Competition Observatory said members had reported experiencing price increases of between 800% and 1500%.
CISPE filed its case with the General Court of the Court of Justice of the European Union in July. The Commission has since filed its defense, and it was to that document that CISPE responded last week.
In its new filing, CISPE claimed that “the Commission had not examined the risk that Broadcom would use VMware’s dominance to drive substantial price increases and tighten contractual lock-in and adopted no safeguards under EU merger rules.”
CISPE director of communications Ben Maynard dismissed fears that any action by the Commission could lead to a fine on VMware that would be passed on to its users, increasing prices even further. “I’m not sure that a fine is a likely consequence. This isn’t an action against Broadcom; this is against the European Commission’s decision,” he said.
Time is relative
If the action is successful, he said, VMware users “may well see a reduction in prices and a return to the terms before the acquisition. I certainly can’t see the action leading to higher prices for VMware users. Most users are already paying a higher price.”
Cases at the General Court have a reputation for being long, drawn-out affairs but Maynard said he hoped the action would be solved relatively quickly before adding, “We’re talking ‘quickly’ in European terms. We hope to have it referred back to the General Court within the first half of next year, with a decision made within a couple of years.”
Broadcom strongly disagreed with CISPE’s allegations. “The European Commission, along with twelve other jurisdictions around the world, approved our acquisition of VMware following a thorough merger review process, and we will uphold the commitments made to the Commission at that time,” a company spokesperson said.
