EU court's confidentiality ruling clears a procedural hurdle, not the merits of CISPE's case against Commission approval

Euro cloud trade association CISPE can keep the identities of members backing its VMware merger challenge confidential from Broadcom following a ruling by the EU General Court.

Cloud Infrastructure Services Providers in Europe filed an action last year seeking to annul the European Commission's approval of Broadcom's acquisition of the cloud and virtualization giant.

CISPE believes the Commission erred in allowing the purchase to go ahead without imposing any conditions on Broadcom to protect the many European cloud providers and their customers who depend on VMware's software.

Broadcom sought access to redacted information identifying members supporting the action, arguing that it needed the information to challenge the action's admissibility. CISPE says the ruling allows the case to proceed without disclosing those identities to Broadcom.

"It is a procedural ruling on confidentiality rather than a decision on the substance of the case, but it removes the immediate obstacle to the action moving forward," a CISPE spokesperson told .

CISPE argued that identifying the members, which are or have been VMware customers, would expose them to a significant risk of retaliation because of Broadcom's market power. Those members had supplied information about their commercial relationships with VMware.

As far as the case itself goes, CISPE says it warned the Commission that Broadcom would use VMware's pre-eminent position in the private cloud market to rewrite licensing terms and reshape the market in its favor.

Just a month after Broadcom's acquisition concluded in November 2023, partners were informed that VMware's channel program was to end in early 2024, and that Broadcom was also ditching the majority of VMware's Cloud Services Providers, keeping only a select few that had the largest turnover.

Despite Broadcom CEO Hock Tan publicly stating that inflating prices was not his strategy, that is what happened. AT&T says that Broadcom proposed a 1,050 percent price increase, for example. Meanwhile, nine out of ten respondents to a recent survey of VMware customers said they were considering moving to alternatives.

CISPE, which represents 48 cloud infrastructure service providers across the EU, says fewer than 20 European providers remain authorized to offer VMware-based services, down from more than a thousand.

Commenting on the latest ruling, CISPE Secretary General Francisco Mingorance declared it a good day for the organization and for the rule of law in Europe.

"The case matters even more today than when we filed it. In the three years since the European Commission waved this deal through without conditions, Broadcom has dismantled the European VMware channel," he said.

"Those excluded have until 31 March, 2027, to sell their infrastructure or their customers to a competitor chosen by Broadcom, or to close. This is the foreclosure the European Commission was warned about."

We asked CISPE what outcome it hoped to achieve, nearly three years after the acquisition closed.

"The immediate objective is to have the Commission's unconditional clearance annulled, on the basis that it failed to properly assess the effect of the acquisition on European cloud providers and the VMware channel," CISPE's spokesperson told .

The Commission did impose conditions concerning interoperability with rival hardware, but CISPE argues these did not address the risks to cloud providers.

"We appreciate that it's a long shot (although there is precedent)," the spokesperson continued. "We have (along with others) also filed a competition complaint with the Directorate-General for Competition against Broadcom for its actions post-merger."

The precedent referred to is the EC approval given to the merger of Sony and BMG's music divisions in 2004, which was ruled to be not of "the requisite legal standard" two years later. The deal was subsequently reassessed and re-cleared.

"Ultimately, we want to do whatever we can to bring Broadcom to the table to negotiate and ideally end some of its most egregious practices so that European cloud providers can once again support cloud customers in a commercially fair and viable manner," the spokesperson added.

asked Broadcom to comment The European Commission declined to comment on procedural matters . ®