The European Commission has opened a formal antitrust investigation to assess whether Broadcom may be restricting competition through exclusivity practices, in breach of EU rules. The Commission intends to impose interim measures during the investigation with regard to TV and modem chipsets markets.
Broadcom is the world’s largest designer, developer and provider of integrated circuits for wired communication devices. It is a global leader in a number of markets, including:
- systems-on-a-chip, which are chipsets combining electronic circuits that constitute the “brain” of a set-top box or modem. As such, they are among the most important components within these devices and are essential to bring the television signals and connectivity to consumers’ premises.
- front-end chips, which are hardware components that translate analogue inputs into digital outputs, and which can then be processed by a system-on-a-chip.
- WiFi chipsets, which are hardware components that enable set-top boxes to deploy wireless local area networks.
- Components for so-called central office/head end equipment to provide high speed data connections.
The Commission has gathered information indicating that Broadcom may be implementing a range of exclusionary practices in relation to these products.
These practices may include (i) setting exclusive purchasing obligations, (ii) granting rebates or other advantages conditioned on exclusivity or minimum purchase requirements, (iii) product bundling, (iv) abusive IP-related strategies and (v) deliberately degrading interoperability between Broadcom products and other products.
As a result of concerns relating to these alleged practices by Broadcom, the Commission has decided to open a formal investigation. In parallel, the Commission has also issued a Statement of Objections seeking to impose interim measures. This sets out the preliminary conclusions of the Commission’s investigation, which are that:
- Broadcom is likely to hold a dominant position in various markets for the supply of systems-on-a-chip for TV set-top boxes and modems.
- certain agreements between Broadcom and seven of its main customers manufacturing TV set-top boxes and modems contain exclusivity provisions that may result in those customers purchasing systems-on-a-chip, front-end chips and WiFi chipsets exclusively or almost exclusively from Broadcom.
- the provisions contained in these agreements may affect competition and stifle innovation in these markets, to the detriment of consumers.
The Statement of Objections preliminarily concludes that an interim measures decision may be indispensable in this case, to ensure the effectiveness of any final decision taken by the Commission at a later date.
In this case, the Commission found that 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. The envisaged interim measures would therefore apply until the Commission concludes its assessment on the substance of the case. More information is available on the Commission’s competition website, in the public case register under the case number AT.40608.