EU hits Broadcom with interim demands in antitrust probe

Brussels — EU antitrust regulators want US chipmaker Broadcom to scrap its exclusivity clauses with TV and modem makers to avoid irreparable harm to the market while they investigate whether this tactic and others are designed to block rivals.

The California-based company’s communications chips power Wi-Fi, Bluetooth and GPS connectivity in smartphones.

The European Commission said the so-called interim measures, the first in 18 years, are warranted due to Broadcom’s likely dominance in the TV and modem chipset markets and deals between the company and seven major customers that resulted in the latter buying chips only from Broadcom.

The EU competition enforcer sent a statement of objections, or charge sheet, to the company on Wednesday setting out reasons why such measures are needed. Broadcom has two weeks to respond. It can also ask for a closed-door hearing to defend itself.

Such measures are rare because proving lasting harm is a high bar. The commission imposed interim measures against German insurer IMS Health in 2001 due to serious and irreparable damage to two rivals.

Commission chief economist Tommaso Valletti said enforcers are sending a strong signal. “This is good because it says to the company: you are doing something which is possibly noxious. Stop now. Immediate effect. To the extent this is foreclosing others, then it stops now, not in 10 years,” Valletti said in a tweet.

The commission said its investigation will focus on Broadcom’s practices, including exclusive purchasing obligations, tying rebates or other benefits to exclusive or minimum purchase requirements, product bundling, abusive IP-related strategies and deliberately making it difficult for Broadcom products to function with rival products

Broadcom's anticompetitive practices prevent its customers, and ultimately consumers, from enjoying the benefits of choice and innovation, EU competition commissioner Margrethe Vestager said.

Broadcom said it believes it complies with European competition rules and the concerns are “without merit”.

In a filing with US regulators, Broadcom said it does not expect a material impact on its set-top box or broadband modem business from the commission’s move. It said the commission’s planned interim measures will not preclude Broadcom from continuing to sell any products.

The commission can levy fines of up to 10% of a company’s global revenues for breaching EU rules. Alphabet unit Google and Qualcomm have been hit with heavy fines in recent years for anticompetitive practices.
Reuters