EU orders Broadcom to suspend parts of chip deals with six major customers

The European Commission has ordered Broadcom to suspend the application of a number of terms and conditions in agreements with six of its main customers. According to the Commission, this prevents irreparable damage to the competitive position of other players.

According to Margrethe Vestager, the current European Commissioner for Competition, there are strong indications that Broadcom is engaged in anti-competitive activities that violate EU competition rules. Broadcom is a major supplier of chipsets for set-top boxes and modems, although the Commission does not clarify exactly which customers are involved. As for the terms, these are provisions that perpetuate Broadcom’s dominant position by imposing purchase obligations and offering the prospect of commercial benefits such as access to technical support and discounts. Those benefits would only become applicable if customers choose Broadcom for their set-top boxes and modems.

If not acted in this way, Vestager says there is a good chance that ‘serious and irreparable damage’ will be caused to competition in the market for socs for set-top boxes and modems. This would lead to higher prices, less choice and less innovation for European consumers. Left unchecked, it will affect a number of tenders launched in the future, including on the “emerging Wi-Fi 6 standard for modems and TV set-top boxes,” the Commission said. Competing chipset suppliers would otherwise no longer be able to compete with Broadcom. Interim measures such as these are rare and are usually introduced if the Commission is concerned that irreparable damage is already occurring before the investigation is completed.

Vestager says the findings come from, among other things, internal Broadcom documents submitted to the EU by Broadcom’s customers and competitors. The Commission has not yet determined whether the terms of Broadcom’s agreements in question violate European rules, but according to the Commissioner Broadcom appears to be abusing its dominant position. Therefore, the company must stop the “anti-competitive terms” within 30 days, prevent similar provisions from taking effect and prevent other agreements from having the same effect. An investigation into the whole case is still ongoing, in which it could eventually lead to a fine. It is not yet known when that investigation will be completed.