European Commission opens antitrust probe into Broadcom
The European Commission has opened an antitrust investigation into American semiconductor supplier Broadcom over concerns that it has engaged in exclusionary practices and abusive IP-related strategies in relation to chipset devices.
In a press release, issued yesterday, June 26, the Commission said that it intends to impose interim measures during the investigation.
While the Commission noted that its preliminary conclusions do not prejudge the outcome of a full investigation, the press release said that “interim measures can only be granted if a company's behaviour constitutes at first sight an infringement of competition rules”.
According to the Commission, Broadcom’s alleged anti-competitive behaviour may include setting exclusive purchasing obligations, and granting rebates and other advantages contingent on exclusivity or minimum purchase requirements.
The EC believes that agreements between Broadcom and seven of its main customers contain illegal exclusivity provisions.
The agreements relate to the purchasing of systems-on-a-chip, an essential component of TV set-top boxes and modems; as well as WiFi chipsets; and front-end chips, which translate analogue inputs into digital outputs.
The Commission also expressed concern that Broadcom may have engaged in illegal product bundling, abusive IP-related strategies and deliberately impeding interoperability between Broadcom’s products and those of other companies.
According to the Commission, the “alleged competition concerns were of a serious nature and that Broadcom's conduct may result in the elimination or marginalisation of competitors before the end of proceedings”.
Margrethe Vestager, commissioner for competition, said that Broadcom was suspected of deliberately excluding competitors from the TV, set-top box and modem markets.
“This would prevent Broadcom's customers and, ultimately, final consumers from reaping the benefits of choice and innovation,” Vestager said.
“We also intend to order Broadcom to halt its behaviour while our investigation proceeds, to avoid any risk of serious and irreparable harm to competition,” she added.
Broadcom filed a Form 8-K with the US Securities and Exchange Commission yesterday, June 26, notifying shareholders of the Commission’s investigation.
In the submission, Broadcom said it believes that it “complies with European competition rules and that the Commission’s concerns are without merit”.
“Broadcom will continue to cooperate with the Commission and looks forward to discussing procedural and substantive matters with the Commission over the coming weeks and month,” the filing said.
Broadcom also added that the proposed interim measures would not “preclude the continued sale by Broadcom of any products”.
The Commission has been active in seeking to stamp out anti-competitive behaviour in the wider chipset market in recent years.
In January 2018, the Commission fined American chip manufacturer Qualcomm almost €1 billion ($1.38 billion) for violations of EU competition law, including an illegal exclusivity deal with Apple.
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