EU to investigate Broadcom for antitrust violations

EU to investigate Broadcom for antitrust violations
Legal

The European Commission has opened an antitrust investigation into leading US chipmaker Broadcom, saying they’ve used exclusivity agreements and other measures to suppress competition, according to The Verge

The commission has also put interim measures in place banning exclusivity agreements during the investigation, “to avoid any risk of serious and irreparable harm to competition,” the commission’s competition policy leader, Margrethe Vestager, said this week. 

The interim ban is the first of its kind issued in nearly two decades, due to the high standard necessary to prove a risk of lasting harm to competition. 

The investigation focuses on the company’s chipsets for broadband modems and TV set-top boxes. According to Vestager:

“TV set-top boxes and modems are part of our daily lives, for both work and for leisure. We suspect that Broadcom, a major supplier of components for these devices, has put in place contractual restrictions to exclude its competitors from the market. This would prevent Broadcom’s customers and, ultimately, final consumers from reaping the benefits of choice and innovation.”

The commission cited deals between Broadcom and seven of its “main customers” that could compel them to purchase certain components exclusively from Broadcom, threatening to “stifle innovation in these markets, to the detriment of consumers.” 

The exclusivity deals are just one practice that’s under investigation by the commission, which will also look into product bundling, potentially harmful IP strategies, and efforts to deliberately make it difficult to use Broadcom products with those of rival companies. 

Tech companies are facing more scrutiny in Europe as well as the US, where regulators are also investigating Broadcom for anti-competitive practices. 

The EU fined chipmaker Qualcomm $1.2 billion this year over deals made with Apple which blocked competitors. Google also faced a $1.5 billion antitrust fine this year from the EU, and regulators are reportedly planning to investigate Apple as well. 

For its part, Broadcom noted that it’s already been in discussions with the commission for months, and that the company “believes it complies with European competition rules and that the commission’s concerns are without merit.”

In a filing with US regulators, they also said they don’t expect the EU investigation to hurt sales of modems of set-top boxes. 

Tech companies are increasingly facing scrutiny, and ultimately steep fines, from EU regulators in recent years. If the commission determines that Broadcom violated EU rules, they could levy fines totaling up to 10 percent of the company’s global revenues. 

Photo: Köf3 [CC BY-SA 3.0 (https://creativecommons.org/licenses/by-sa/3.0)]

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