Margrethe Vestager to Broadcom: Stop exclusivity deals until EU probe ends
The order could apply for up to three yearsBy Adrian Potoroaca
The big picture: Broadcom has been told to stop exclusivity deals while it's being investigated by the EU on their effects on the industry. And since such an order is rarely used, it proves that Vestager is willing to deploy this tool to shield other companies in the same market. The Commissioner's reappointment earlier this year has wide implications for tech giants, which aren't used to interim measures and are now faced with more antitrust scrutiny than ever.
Broadcom's tech is slowly eating the world, but that probably won't last forever. The U.S. silicon giant is currently under fire both at home and in the EU over its anticompetitive practices, which are starting to bite back. That said, antitrust investigations are known to drag for years while the offender can continue in the same fashion.
The company was taken by surprise when the European Commission's vice president of digital policy, Margrethe Vestager, announced that "interim measures" would be taken against the company to ensure that competitors will be around to see the outcome of the investigation. Broadcom now has a 30-day ultimatum to halt its exclusivity practices and tell its customers that it will no longer apply such provisions to their contracts.
The order hasn't been used in almost two decades, which means the Commission is now willing to go to great lengths to align antitrust enforcement to the realities of fast-moving markets.
Vestager said in a statement that "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. 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."
Broadcom has responded that they will comply while they attack the decision in the European courts. The company believes that "these provisions have a meaningful effect on whether the customers choose to purchase Broadcom products," and that the order would not affect the sales of modems and set-top boxes powered by its chipsets.
It's worth noting the decision made by the European Commission draws from lessons learned with Qualcomm, yet another chipmaker that managed to squash at least one of its competitors through predatory pricing. The result of the investigation was a hefty fine that came too late, so the EU is trying to avoid that by using interim measures whenever they are warranted.
The Broadcom case is seen as the basis for a new digital policy that will affect companies like Google, Apple, Facebook, Amazon, preventing them from becoming monopolistic powers that are able to carve their way to market dominance unhindered.