In the IT world, long-term collaborations between customers and suppliers are very common. These long-term collaborations also often lead to customers becoming heavily dependent on their suppliers, which can cause problems. It regularly happens, for example, that IT companies abuse this dependency to change the current form of cooperation with their customers and impose (financially) less favourable terms on them. The District Court of The Hague recently ruled on this issue in a case between Rijkswaterstaat (RWS, the Dutch national roads and water authority) and software supplier Broadcom/VMware.
Separate support no longer part of the product portfolio
RWS worked with specific VMware products for which it had purchased perpetual licences from VMware. For technical support, it repeatedly concluded three-year support contracts, with the last agreement due to expire in July 2025. Broadcom, by then the owner of VMware, subsequently made a new offer: a package with usage licences and support. This came, however, with a substantial cost increase of 85%. Separate support for the existing products was no longer part of the package options, according to Broadcom.
RWS felt compelled by this to switch to other software and proposed phasing out the VMware software over 2-3 years. When Broadcom indicated it was unwilling to cooperate with this, RWS initiated summary proceedings. In these, RWS argued that Broadcom was acting unlawfully by prematurely ending the life cycle of the VMware products, leaving RWS with no real opportunity to move away from these products. Instead, Broadcom would be forcing RWS to purchase the new product portfolio at significantly higher prices. According to RWS, Broadcom was thereby breaching the duty of care resting on IT suppliers and was abusing its dominant position.
Abruptly ending support: breach of the duty of care
The interim relief judge emphasised that Broadcom, as a supplier, is in principle free to change its commercial strategy and product offering. However, that freedom has limits when a customer is heavily dependent on the products supplied, as was the case with RWS. According to the court, Broadcom acted carelessly by announcing the changes too late, leaving RWS unable to prepare for the discontinuation of support. The new prices were only shared in May 2024, and no appropriate offer was made to provide support solely on already-purchased products. There was also a lack of reasonable exit support, while RWS was dependent on the software for vital infrastructure.
The court held that Broadcom had thereby broken the legitimate expectations of RWS, based on the lifecycle policy applied until then. Abruptly ending support was therefore classified as careless and unlawful. The interim relief judge therefore ordered Broadcom to continue providing technical support for two years on the products for which RWS holds perpetual licences. This includes updates, bug and security fixes, and technical assistance.
Important lessons
This case shows that the duty of care of IT suppliers can be a powerful tool against an overly strict commercial approach. Suppliers may adjust their product offering or terms, but must act carefully towards existing customers, especially with business-critical software. This applies not only to packages such as VMware, but also to hosting and cloud providers. Timely and clear communication and facilitating a careful transition are essential in this regard. For customers, this ruling provides an important tool for enforcing safeguards in similar cases, especially where contractual exit arrangements are lacking.
The corporate lawyers at The Legal Company are happy to help you draft, review and negotiate IT contracts. Would you like advice or do you have questions following this ruling? Then contact us via info@thelegalcompany.nl or call us on 020-3450152.