9 October 2020Muireann Bolger

Broadcom to alter business practices after EU competition investigation

Broadcom has been forced to alter the way it does business to appease the European Commission’s concerns about the agreements it sets for companies that use its technology, including alleged “abusive IP strategies”.

The Commission confirmed on Wednesday, October 7, that the commitments offered by the chipmaker had become legally binding according to EU competition rules.

In June 2019, the Commission  opened a formal competition investigation into Broadcom’s exclusivity or quasi-exclusivity arrangements in relation to systems-on-a-chip (SoCs) for TV set top boxes, xDSL and fibre modems.

During its investigation, the Commission found that Broadcom may be implementing a range of exclusionary practices, including abusive IP-related strategies, alongside setting exclusive purchasing obligations, and “deliberately degrading interoperability” between Broadcom products and other products.

The Commission ordered Broadcom to stop applying these provisions contained in agreements with six of its main customers and ordered the implementation of interim measures applicable for a period of three years.

Following the imposition of interim measures, Broadcom offered commitments to address the Commission's concerns, which were later amended and enhanced in July following feedback from stakeholders.

According to the new rules, Broadcom will suspend all existing agreements containing exclusivity or quasi-exclusivity arrangements and/or leveraging provisions concerning SoCs for TV set-top boxes and Internet modems, and has committed not to enter into new agreements containing such terms.

If Broadcom were to breach the commitments, the Commission could impose a fine of up to 10% of Broadcom's total annual turnover, without having to find an infringement of EU competition rules.

The Commission’s executive vice-president Margrethe Vestager, who is in charge of competition policy, said: “Today's decision legally binds Broadcom to respect the commitments. They will ensure that existing chipset makers competing with Broadcom and potential new entrants will be able to compete on the merits.

“Producers of set-top-boxes and Internet modems, telecom and cable operators and ultimately consumers will benefit from competition between chipmakers in terms of lower prices and more innovative products.”

According to the Commission, Broadcom's final commitments will ensure that other companies can compete fairly in the marketplace and that consumers can benefit from lower prices and innovative products.

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