The European Commission has opened a formal antitrust investigation to assess whether Broadcom may be restricting competition through exclusivity practices, in breach of EU rules.
The Commission intends to impose interim measures during the investigation with regard to TV and modem chipsets markets.
Margrethe Vestager, 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 is the world's largest designer, developer and provider of integrated circuits for wired communication devices. It is a leader in systems-on-a-chip, front-end chips, WiFi chipsets, and components for so-called central office/head end equipment to provide high speed data connections.
The Commission has gathered information indicating that Broadcom may be implementing a range of exclusionary practices in relation to these products.
These practices may include (i) setting exclusive purchasing obligations, (ii) granting rebates or other advantages conditioned on exclusivity or minimum purchase requirements, (iii) product bundling, (iv) abusive IP-related strategies and (v) deliberately degrading interoperability between Broadcom products and other products.
In parallel, the Commission has also issued a Statement of Objections seeking to impose interim measures. This sets out the preliminary conclusions of the Commission's investigation, which are that:
Broadcom is likely to hold a dominant position in various markets for the supply of systems-on-a-chip for TV set-top boxes and modems.
certain agreements between Broadcom and seven of its main customers manufacturing TV set-top boxes and modems contain exclusivity provisions that may result in those customers purchasing systems-on-a-chip, front-end chips and WiFi chipsets exclusively or almost exclusively from Broadcom.
the provisions contained in these agreements may affect competition and stifle innovation in these markets, to the detriment of consumers.
The Commission can impose interim measures on companies that are suspected of engaging in anti-competitive practices in cases where a final decision on substance has not been reached yet.
In this case, the Commission found that the alleged competition concerns were of a serious nature and that Broadcom's conduct may result in the elimination or marginalisation of competitors before the end of proceedings.
The Commission will now carry out its investigation as a matter of priority.