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The UK Competition and Markets Authority has concluded its phase one investigation into the proposed $6.4bn acquisition of HashiCorp by IBM. The decision confirms the regulator will not escalate the inquiry to an in-depth phase two review, having found no realistic prospect of a substantial lessening of competition in relevant UK markets.
The deal, originally announced in April 2024, involves IBM acquiring full ownership of HashiCorp through a share purchase agreement under which HashiCorp shareholders would receive $35 per share. IBM’s stated rationale is to bolster its hybrid cloud and AI capabilities by integrating HashiCorp’s multi-cloud infrastructure automation tools into its broader enterprise technology stack.
HashiCorp is best known for Terraform, a tool used for provisioning cloud infrastructure, while IBM offers Ansible for configuration tasks through its Red Hat subsidiary. Although both operate in the Infrastructure-as-Code domain, the CMA assessed whether the tools compete directly in the UK software market. Focusing on paid multi-cloud automation tools, the regulator reviewed documents and market feedback, concluding that Terraform and Ansible are largely complementary—Terraform handles provisioning, while Ansible manages post-deployment configuration.
The CMA also reviewed IBM’s and HashiCorp’s development plans and found no evidence of significant strategic efforts to bring the two products into closer competition. Although IBM had previously explored enhancements to Ansible that might position it closer to Terraform’s provisioning functionality, those initiatives were discontinued before the merger discussions.
Third-party submissions confirmed that Terraform and Ansible are typically used for distinct purposes and rarely considered interchangeable. Most customers reported using both tools concurrently rather than as alternatives. Market analysts and stakeholders did not express material concerns regarding the transaction’s effect on competition or innovation. “The CMA found that competition between Terraform and Ansible is not an important driver of the development of these products,” the authority stated in its final report.
Regulator examines foreclosure risks and interoperability concerns
The CMA examined whether the merged entity could foreclose rivals by bundling Ansible and Terraform or limiting compatibility with third-party tools but found this unlikely due to technical risks and potential customer backlash. While the share of supply test was met, the regulator concluded that competition from hyperscalers and open-source platforms would continue to constrain the merged firm.
The decision not to refer the merger to a phase two investigation allows IBM to proceed with completing the acquisition, pending regulatory approvals in other jurisdictions. The merger had already received unconditional clearance in Austria and Germany in mid-2024.
IBM and HashiCorp’s combined activities are expected to enhance the development of hybrid cloud solutions, with IBM stating the acquisition will enable HashiCorp to scale its services globally through IBM’s enterprise client network.
Last month, IBM won a UK High Court case against Swiss firm LzLabs, after its UK subsidiary Winsopia was found to have breached a software licence agreement involving alleged misuse of mainframe-related trade secrets.
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