Chip giant ordered to halt exclusivity deals after European watchdog utilises powers last used 18 years ago
As expected the European Commission has made use of rarely-used powered to order Broadcom to halt exclusivity deals with six TV and modem makers for up to three years.
Earlier this month it was reported that EU competition commissioner Margrethe Vestager would order Broadcom to cease allegedly the anti-competitive practice of obliging its customers to stop buying chips from elsewhere.
The European Commission argues this policy is an abuse of Broadcom’s dominant market position, and it opened an investigation in June 2019 into the matter.
The powers in question were apparently established back in 1980, but have not been used since 2001.
And now the European Commission announced that it had “ordered Broadcom to stop applying certain provisions contained in agreements with six of its main customers. This will prevent serious and irreparable harm to competition likely to be caused by Broadcom’s conduct, which prima facie (at first sight) infringes EU competition rules.”
“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,” said Margrethe Vestager, Commissioner in charge of competition policy.
“Broadcom’s behaviour is likely, in the absence of intervention, to create serious and irreversible harm to competition,” she added. “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, which is how long the EC investigation is expected to take.
The order is expected to be challenged by Broadcom, which is planning fight it up to the level of the European Court of Justice (ECJ) if necessary.
Broadcom has said in the past that it follows EU competition law and that the Commission’s case is without merit.
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