Broadcom in EU antitrust spotlight, faces interim measures

Key Points
  • EU antitrust regulators will investigate whether U.S. chipmaker Broadcom is guilty of antitrust measures.
  • The European Commission said it planned to impose interim measures to avoid "serious and irreparable harm" to the market.
Angel Navarrete | Bloomberg | Getty Images

EU antitrust regulators will investigate whether U.S. chipmaker Broadcom uses exclusivity restrictions to block rivals in the TV and modem chipsets markets, a move that could lead to hefty fines for the company and an order to end such practices.

The European Commission also said it plans to impose interim measures during the probe to avoid "serious and irreparable harm" to the market. It sent a statement of objections, or charge sheet, to the company setting out reasons why such measures are needed.

Broadcom said it believes it complies with European Competition rules and that the concerns are "without merit."

The San Jose, Calif.-based company's communications chips power Wi-Fi, Bluetooth and GPS connectivity in smartphones.

Broadcom's anti-competitive practices prevent its customers, and ultimately consumers, from enjoying the benefits of choice and innovation, European Competition Commissioner Margrethe Vestager said in a statement.

Such practices include exclusive purchasing obligations, tying rebates or other benefits to exclusive or minimum purchase requirements, product bundling, abusive IP-related strategies and deliberately making it difficult for Broadcom products to function with rival products, it said.

EU competition enforcers said interim measures were warranted because of Broadcom's likely dominance in the TV and modem chipset markets and deals between the company and seven major customers that resulted in the latter buying chips only from Broadcom.

In a filing with U.S. regulators, Broadcom said it did not expect a material impact on its set-top box or broadband modem business from the Commission's move.

It said the Commission's planned interim measures would not preclude Broadcom from continuing to sell any products.

The Commission can levy fines of up to 10% of a company's global revenues for breaching EU rules. Alphabet unit Google and Qualcomm have been hit with heavy fines in recent years for their anti-competitive practices.