Broadcom ordered to stop exclusivity deals till EU probe ends

BRUSSELS - 16 October 2019: U.S. chipmaker Broadcom (AVGO.O) has been ordered to halt exclusivity deals with TV and modem makers while EU antitrust enforcers investigate whether these agreements are aimed at thwarting rivals.

The European Commission had in June warned Broadcom of a possible interim measure. The company, whose chips power smartphones, computers and networking equipment, is a major supplier to Apple (AAPL.O).

“This will prevent serious and irreparable harm to competition likely to be caused by Broadcom’s conduct, which prima facie infringes EU competition rules,” the Commission said.

The Commission said Broadcom has 30 days to comply with the order, which is valid for up to three years.

The competition enforcer’s concerns center on Broadcom’s deals with six TV set-top box and modem makers which result in the companies buying various chips exclusively or quasi-exclusively from the company.

Contentious practices include tying rebates or other benefits to exclusive or minimum-purchase requirements. Reuters reported on Oct. 4 that the Commission would order Broadcom to suspend these practices.

Interim measures are rare and are only issued if the Commission has reason to believe that companies will squeeze out or marginalize rivals before it can wrap up its investigations which can take several years.