THE EUROPEAN COMMISSION (EC) has ordered Broadcom to halt its exclusivity deals with TV and modem amid its antitrust investigation into the company.
Back in June, the EU watchdog launched an antitrust probe into Broadcom over concerns that the US chipmaker could be restricting competition in various markets by implementing a range of exclusionary practices in relation to sales of its set-top box and modem chipsets.
These practices, the EC laid out at the time, include setting exclusive purchasing obligations; granting rebates or other advantages conditioned on exclusivity or minimum purchase requirement; product bundling; abusive IP-related strategies; and deliberately degrading interoperability between Broadcom products and other products.
This could result in those customers purchasing chipsets "exclusively or almost exclusively" from Broadcom, which the watchdog says could stifle innovation in these markets, to the detriment of consumers."
As it previously threatened to do, the Commission on Wednesday ordered Broadcom to half exclusivity deals with six of its main customers, in order to "prevent serious and irreparable harm to competition likely".
Margrethe Vestager, Commissioner in charge of competition policy, said: "We have strong indications that Broadcom, the world's leading supplier of chipsets used for TV set-top boxes and modems, is engaging in anticompetitive practices. Broadcom's behaviour is likely, in the absence of intervention, to create serious and irreversible harm to competition.
"We cannot let this happen, or else European customers and consumers would face higher prices and less choice and innovation. We, therefore, ordered Broadcom to immediately stop its conduct."
The Commission said Broadcom has 30 days to comply with the order, which is valid for up to three years.
In a statement given to INQ, Broadcom said: "As we previously disclosed in an 8-K filing on June 26, 2019, Broadcom's contracts with the customers that the European Commission characterizes as exclusivity-inducing remain in force, other than the provisions at issue, and we intend to continue to support these customers going forward.
"We do not believe that these provisions have a meaningful effect on whether the customers choose to purchase Broadcom products. Rather, the principal effect of the Commission's decision will be to disrupt the efficiencies that Broadcom and European OEMs have achieved through strategic alignment, which multiple OEMs have testified is critical to maintaining their competitiveness. Accordingly, we continue to believe that this action will not have a material impact on our set-top box or broadband modem businesses.
"We intend to appeal the Commission's decision to the European Courts and in the meantime comply with the Commission's order."
Broadcom is also facing an antitrust probe in the US courtesy of the Federal Trade Commission (FTC), which is investigating whether the chipmaker abused its dominance to hamper competition. µ
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