The European Commission has ordered chip maker Broadcom to relax exclusivity agreements it has placed on six of its main customers.
In a statement, Margrethe Vestager, Commissioner in charge of competition policy, said at first sight Broadcom was in breach of 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. 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.”
The announcement comes just four months after the Commission opened an antitrust investigation into whether Broadcom was restricting competition within the “systems-on-a-chip” marketplace.
Systems-on-a-chip are effectively the brains behind the set-top box that bring in the television signals from source to the consumer.
The Commission has concluded that were Broadcom to continue with its practices it would affect a number of forthcoming tenders, particularly those around the introduction of the WiFi 6 standard.
In a statement released by Broadcom to Broadband TV News, the technology company said: “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. We intend to appeal the Commission’s decision to the European Courts and in the meantime comply with the Commission’s order.”
