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October 18, 2019updated 21 Oct 2019 10:08am

Broadcom Practices Causing “Serious and Irreparable” Harm: European Commission

"This action will not have a material impact"

By CBR Staff Writer

Semiconductor heavyweight Broadcom says it will challenge the European Commission (EC) in the courts following the placement of “interim measures” on the company during an antitrust investigation.

Competition commissioner Margrethe Vestager says the EC has “strong indications” that Broadcom is engaging in anti-competitive practices and warned that these are causing “serious and irreparable harm”.

The commission states that Broadcom is dominant in three different system-on-a-chip (SoC) markets, namely TV set-top boxes, fibre modems and xDSL modems. The EC believe that the firm has abused its dominant position in these markets by establishing “exclusively or quasi-exclusively” conditions with six manufacturers of TV set-top boxes and modems.

Broadcom Europe Competition Warning

Competition commissioner Margrethe Vestager 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.”

Broadcom told Computer Business Review that it “intends to appeal the Commission’s decision to the European Courts and in the meantime comply with the Commission’s order.”

Broadcom Europe to Challenge Ruling

Broadcom Will Fight EU Commissioner

Credit: Sam Balye via Unsplash

As result of the EU’s antitrust investigation, in a nascent stage, the Commissioner has directed Broadcom to stop applying exclusivity clauses in its contracts with six manufacturers of TV set-top boxes and modems it has relationships with.

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Broadcom has 30 days to comply with the directive. The interim measures will apply for “earlier of three years” or until the final decision is made.

A Broadcom spokesperson told Computer Business Review that they believe the EC has mischaracterised the situation and that it intends to appeal the Commission’s decision to the European Courts.

Broadcom informed us that: “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.”

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