EC slaps Broadcom with interim monopoly order

The European Commission has issued an interim order against Broadcom as part of its investigation into alleged monopolistic practices by the company in the set-top box and modem chipset markets, forcing the company to abandon selected provisions in its contracts with six customers.

The European Commissioned announced the launch of an investigation into US chipmaker Broadcom back in June, over accusations the company has been using illegal exclusionary practices to keep its competitors locked out of the set-top box and modem chipset markets. '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,' said Commissioner Margrethe Vestager at the time. '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.'

Now the Commission has found 'indications' that Broadcom has, indeed, been acting outwith the law, and has handed down an interim order which gives the company 30 days to cease enforcing key terms against six of its major customers.

'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,' Commissioner Vestager explains in the Commission's announcement. '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 Commission has found Broadcom is 'at first sight' exploiting its dominant position in the markets by infringing competition rules in contracts with six manufacturers by the inclusion of clauses which include rebates and other non-price-related advantages in exchange for exclusively or quasi-exclusively buying and building with Broadcom parts. As a result, it has ordered the company to case applying the contractual terms and to refrain from placing the same or similar terms into future contracts within the next thirty days, and for three years thereafter - or until a final ruling is provided in the investigation proper, whichever comes first.

Broadcom has not yet publicly commented on the order.