European Union orders anti-trust investigation of Broadcom

The European Commission has ordered investigations against Broadcom’s anti-competitive practices.  Broadcom, one of the leading chip manufacturers has been accused of enforcing exclusivity agreements, which aim at establishing its dominance in the market to block out competitors.

The Commission is specifically looking into the agreement related to Broadcom’s chipsets for set-top boxes and modems. As per the agreement between Broadcom and seven of its “main customers”, making set-top boxes and modems, they are to purchase certain select components, like Wi-Fi chipsets, only from Broadcom. The commission said that such an agreement could ‘stifle innovation in these markets, to the detriment of consumers’.

Though the investigation is going on, the EU said that it would to impose ‘interim measures’ to ban the alleged exclusivity.

Margrethe Vestager, the commissioner in charge of competition policy, said: “TV set-top boxes and modems are part of our daily lives, for both work and for leisure. We suspect that Broadcom, a major supplier of components for these devices, has put in place contractual restrictions to exclude its competitors from the market. This would prevent Broadcom’s customers and, ultimately, final consumers from reaping the benefits of choice and innovation.

“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.”

Broadcom called the EU allegations as ‘without merit’ and wrote a filing with the Securities and Exchange Commission that said the company ‘believes it complies with European competition rules’.

Broadcom is facing similar anti-trust investigation from the FTC in the US over its competition-blocking practices with regard to its Wi-Fi and Ethernet chips.

In recent years, Europe Union’s anti-trust authorities are keeping a close eye on the tech giants, who try to dominate the market to knock off the competition. Earlier this year, the EU fined Qualcomm $1.2 billion for making deals with Apple to block competitors; Google was also charged a similar fine in March, and Apple also could fall in the ambit of investigation for its control over the App Store.

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