The impact of Tesco versus Broadcom lawsuit on software procurement
The lawsuit shows the challenges in dealing with a company that has stopped selling key products and the impact on the software supply chain
The latest filings in Tesco’s £100m lawsuit against Broadcom and VMware over an alleged breach in software licensing terms demonstrates the complexity in dealing with resellers and distributors of VMware software.
It also highlights the risk in having one company provide not one, but two business-critical products, a situation Tesco found itself in as a result of Broadcom’s acquisition of both CA Technologies in 2018 and VMware in 2023.
Tesco’s complaint, filed on 15 July 2025, states that it is a long-standing customer of VMware International and CA Europe through the purchase of VMware licences for server virtualisation software and CA Technologies’ mainframe software, along with support services. Tesco stated in the complaint that Broadcom is now seeking to supply its virtualisation and mainframe software and services to the retailer on an abusive, “take it or leave it”, long-term and bundled basis.
The VMware licences and support were not purchased directly from VMware. Instead, Tesco procured the products and support services via a reseller, Computacenter, which had an agreement with software distributor Dell.
In 2023, following its acquisition of VMware, Broadcom announced radical changes to licences, resulting in a simpler range of VMware product bundles, and a focus on moving its customers off VMware’s perpetually licensed virtualisation platform and onto VMware Cloud Foundation subscription-based licensing.
Many existing customers have found that the new products increased their VMware costs dramatically, forcing some either to pay for the product bundles, which included products they did not use, or migrate to alternative virtualisation platforms.
Tesco claims that Broadcom has threatened to increase prices excessively for the VMware and mainframe software support it used. It said it was unable to migrate easily to another virtualisation or mainframe supplier in the short term, and that it would take at least three years to move off Broadcom’s VMware and CA Technology products.
Tesco maintains that Computacenter was well aware it could not operate its retail business without the VMware software and support services or the mainframe software and support services. It stated that the majority of its stores operate using these software products and support services to administer business-critical functions such as logistics, stock management and replenishment, and payments.
The legal filings show that on 29 January 2021, Tesco originally purchased the VMware software licences from Computacenter, which along with VMware and Broadcom is a defendant in the legal dispute. The products covered include VMware vSphere Foundation and VMware Cloud Foundation licensed perpetually and VMware Tanzu Basic and Tanzu Mission Control, which were licensed under an initial contract term up to 28 January 2026.
The agreement covered a five-year payment schedule, but Broadcom has denied there was an agreement between VMware International and Tesco in relation to the five-year payment schedule.
Now Dell has been drawn into the dispute. Prior to 2024, Dell was a distributor of VMware and, according to Broadcom’s legal filings, Dell had a channel partner agreement with Computacenter dating back to 2013. However, on 8 January 2026, Computacenter filed a claim against Dell relating to its inability to provide the VMware software it was contractually obliged to deliver to fulfil the contract with Tesco.
Broadcom claims that VMware and its subsidiaries had no obligation to Dell or its subsidiaries regarding the provision to renew VMware product offerings. It stated that as per the 2023 distributor agreement with Dell, any renewal was subject to the written acceptance by VMware.
Dell has now said it will sue VMware International for £10m, if it is found to have broken its contractual obligation to Computacenter.
Contract Ts&Cs. Who is liable?
In a LinkedIn post, Barry Pilling, principal consultant at BeDigital, noted that the case is about Broadcom not honouring a contractual obligation claimed by Tesco to provide the retailer with four years of additional support at the expiry of its enterprise licence agreement (ELA).
Broadcom argues that Tesco would not have the option to renew support services and Computacenter would not be obliged to procure a renewal of the Tanzu Licence if the relevant software or services are no longer available, or the products have reached end of life.
Commenting on Pilling’s LinkedIn post, Scott Bickley, a consultant at Info-Tech Research Group, said: “Having read most of the legal complaints and having reviewed hundreds of VMware contracts, it would appear few of these legal claims have legs. VMware was quite crafty inserting language that allowed them to go EOL (end of life) with active products at their discretion, effectively relieving themselves of future obligations around support.”
But there is more to the dispute, as Pilling explained in a conversation with Computer Weekly. He said Tesco is also claiming Broadcom has acted in an anti-competitive manner. “Tesco is saying Broadcom has been abusing its dominant market position,” said Pilling. “60% of the world’s virtualisation runs on its platform, and it has ramped up pricing without giving them any justification.”
Pilling noted that if the High Court rules that Broadcom has breached competition law, the UK’s competition regulator, the Competition and Markets Authority (CMA), will need to investigate. As Pilling pointed out, the CMA had already approved Broadcom’s acquisition of VMware.
However, he believes that decision did not take into account VMware’s dominant position in the marketplace. At the time of the CMA’s investigation: “There was a lot of concern in the industry around whether Broadcom, one of the world’s biggest hardware providers, would lock customers into its hardware when it sold them VMware software, which is what the CMA investigated. But nobody looked at the fact that VMware is the world’s biggest virtualisation software provider.”
The nuanced arguments presented in the court documents from the different parties represent a snapshot of the complexity of this case. Broadcom has stated that it has the right to stop selling products and providing support in a way that supersedes existing licence contracts. And while there appears to be email correspondence between Tesco and VMware relating to software contract negotiation, Broadcom is arguing that its direct relationship was with Dell, not Tesco.
The High Court will ultimately decide if Broadcom has broken its contractual obligation to provide VMware software and support services, and if it is acting in an anti-competitive manner. But as the case moves forward, the Tesco versus Broadcom, VMware and Computacenter lawsuit demonstrates the precarious position IT leaders and the organisations they work for can face when a key software provider changes its business model.
