The European Commission has opened an antitrust investigation into Broadcom, one of the leading chip manufacturers, over concerns that the company has enforced exclusivity agreements that leverage its dominance in the market to block out competitors.
The commission is particularly focused on Broadcom chipsets for modems and TV set-top boxes, and it intends to impose an interim ban on the alleged exclusivity measures “to avoid any risk of serious and irreparable harm to competition,” says Margrethe Vestager, the commission’s competition policy leader.
The US is also investigating Broadcom
Broadcom is also under investigation by the US Federal Trade Commission over similar concerns. Bloomberg reported last month that the FTC was investigating anti-competitive practices around the company’s Wi-Fi and Ethernet chips, amplifying an inquiry that began more than a year earlier.
The European Commission says that agreements between Broadcom and seven of its “main customers” making set-top boxes and modems contain exclusivity agreements that “may result” in them only purchasing select components, like Wi-Fi chipsets, only from Broadcom. That agreement could “stifle innovation in these markets, to the detriment of consumers,” the commission writes.
Broadcom said it disagrees with the commission’s allegations. “Broadcom believes it complies with European competition rules and that the commission’s concerns are without merit,” the company wrote in a filing with the Securities and Exchange Commission. Broadcom said it has been in discussion with the commission for months already and will continue to cooperate with the investigation.
While Broadcom isn’t as widely known as chipmakers like Intel or Qualcomm, its products are widely used and can be found in devices like Apple’s iPhone XS and Dell’s XPS 13. Broadcom actually surpassed Qualcomm in chipset revenue and market share last year, according to research firm Gartner, and it’s been trying to get even bigger. In 2017, Broadcom attempted to acquire Qualcomm, though the acquisition ultimately failed.
Antitrust authorities — in the European Union, in particular — have been paying closer attention to tech giants in recent years. The EU fined Qualcomm $1.2 billion earlier this year for deals it made with Apple to lock out competitors; Google was hit with an even larger fine in March; and Apple may now be under investigation for its control over the App Store.