Broadcom has agreed to legally binding commitments with EU competition authorities aimed at ensuring the company does not abuse its dominant position in the market for SoCs for set-top boxes and internet modems. Following interim measures taken against the company a year ago, the European Commission has approved new long-term obligations in the company's sales agreements, valid for seven years.
The Commission first launched an investigation into Broadcom's sales practices in July 2019. It was concerned about certain exclusivity or quasi-exclusivity and leveraging arrangements imposed by Broadcom on customers. In October 2019, Broadcom was ordered to stop applying the contested provisions in agreements with six of its main customers and additional interim measures were imposed for three years.
Since then, Broadcom made more long-term commitments in an attempt to avoid fines or other sanctions for competition violations. The Commission consulted the market on the proposals from April this year, and Broadcom offered further amendments in July. The Commission said the commitments address its concerns and will be legally binding on Broadcom for the next seven years. The company has 30 days to implement the changes to its sales practices.
These include not requiring or inducing any customer to take a minimum percentage of supply from Broadcom or conditioning the supply or related terms on taking other products from Broadcom. This applies in the European Economic Area for SoCs for TV set-top boxes, xDSL modems and fibre modems. In the entire world excluding China, Broadcom may not require any customer to take more than 50 percent of its supply from the company.
Any infringement of the commitments can still result in a fine of up to 10 percent of the company's turnover, without the need for proving competition violations.
