The European Commission has confirmed the start of a formal antitrust investigation into whether Broadcom may be restricting competition through exclusivity practices in sales of its set-top box and modem chipsets. The Commission said initial investigations show the competition violations are serious enough to warrant interim measures against the company until it reaches a final decision in the case.
The US Federal Trade Commission already has a competition investigation underway against Broadcom since at least early 2018. Reports that the EU started its own probe first emerged last October.
The Commission's information shows that Broadcom may be setting exclusive purchasing obligations, granting rebates or other advantages conditioned on exclusivity or minimum purchase requirements, bundling products, using abusive IP-related strategies and deliberately degrading interoperability between Broadcom products and other products. The company has been told to halt the practices until the formal investigation is completed.
Dominant position
The statement of objections sent to the company states that Broadcom is likely to hold a dominant position in various markets for the supply of SoCs for set-top boxes and modems. Certain agreements between Broadcom and seven of its main customers manufacturing set-top boxes and modems contain exclusivity provisions that may result in those customers purchasing systems-on-a-chip, front-end chips and Wi-Fi chipsets exclusively or almost exclusively from Broadcom. The provisions in these agreements may affect competition and stifle innovation in these markets, to the detriment of consumers, the Commission said.
The Commission can impose interim measures on companies that are suspected of engaging in anti-competitive practices in cases where a final decision on substance has not been reached yet. In this way, the Commission can avoid that the suspected anti-competitive behaviour damages the market irreparably before it has had time to sanction such behaviour. Interim measures can only be granted if a company's behaviour constitutes at first sight an infringement of competition rules and if there is a risk of serious and irreparable harm to competition.
