EU antitrust authorities issue rare interim order against Broadcom, in ongoing probe

EU antitrust authorities issue rare interim order against Broadcom, in ongoing probe
Legal

Europe’s antitrust authorities have ordered the US chipmaker Broadcom to halt potentially anticompetitive practices while they’re under investigation, in an unusual step that could suggest swifter action against tech giants in the future, according to Reuters.

The probe by the Competition Commission, led by antitrust chief Margrethe Vestager, is investigating exclusivity clauses in contracts with six of Broadcom’s major customers, including TV and modem manufacturers. They’ve now been ordered to halt the practice for up to three years while the commission investigates, a measure that hasn’t been issued by antitrust authorities in 18 years. Vestager said such interim measures are an important tool in “fast-moving markets.” 

Critics have called on Vestager to issue an interim order against Google in the commission’s efforts to rein in the tech giant, and the move against Broadcom suggests a temporary measure could be considered. Vestager said she hasn’t yet identified other cases where the measures would be appropriate, but that they’ll be “on the table” in the future. 

“We have strong indications that Broadcom, the world’s leading supplier of chipsets used for TV set-top boxes and modems, is engaging in anticompetitive practices. Broadcom’s behavior is likely, in the absence of intervention, to create serious and irreversible harm to competition,” Vestager said in a statement.

“We cannot let this happen, or else European customers and consumers would face higher prices and less choice and innovation. We therefore ordered Broadcom to immediately stop its conduct.”

The company supplies chips for smartphones, computers, and other equipment. The contracts under investigation require the six customers to buy equipment exclusively, or nearly exclusively, from Broadcom, with the clause tied to rebates or other incentives.

The commission has been investigating the chipmaker over the past year, and Vestager said the preliminary findings have already suggested that it’s abusing its dominant position in the market to suppress competition. 

The chipmaker said it would comply, but would also appeal the commission’s assessment of their contracts. 

In order to apply such interim measures in other cases in the future, Vestager said: 

“Two quite substantial conditions will have to be met. One we have to prove that it’s likely there will be serious and irreparable harm to competition, and second we’ll have to find that there is an infringement at first sight.”

Photo: Web Summit [CC BY 2.0 (https://creativecommons.org/licenses/by/2.0)]

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