The European Union has launched an investigation into Broadcom. The semiconductor supplier would engage in anti-competitive business practices. The company would harm competitors through restrictive supply contracts with customers.

The European Commission itself published the news on Wednesday. According to Silicon Angle, regulators would focus their attention on the way in which Broadcom has maintained its position as the dominant maker of chips for modems and TV set-top boxes.

Exclusivity clauses

For example, Broadcom would have added exclusivity clauses to agreements with seven modem and set-top box makers. In addition, the EU also suspects the semiconductor giant of offering incentives, such as discounts to customers in exchange for buying more chips. Furthermore, Broadcom is said to have also been guilty of setting minimum purchase requirements for deals. It is also claimed that several products have been bundled by the supplier in transactions.

The EU’s investigation goes further than just examining the chipmaker’s supply contracts. It also examines whether Broadcom is dealing with IP-related strategies that are disadvantageous, and assesses whether the company deliberately made it difficult to use its technologies with products from other companies.

Contractual limitations

We suspect that Broadcom has introduced contractual restrictions to exclude competitors from the market. This would prevent Broadcom customers from benefiting from the advantages of choice and innovation. Ultimately, the end users will also be affected, says EU Competition Commissioner Margrethe Vestager.

Although the investigation is still ongoing, the EU intends to put an immediate end to harmful business practices. According to The Wall Street Journal, it is the first time in 18 years that European regulators have taken this step. The reason would be that Broadcom’s competitors could suffer irreparable damage if they had to wait for a decision to be made. Something that could last for years.

In addition, American regulators are also investigating the chipmaker’s business tactics. In early 2018, the U.S. Federal Trade Commission initiated an antitrust investigation into the contractual conditions that Broadcom had imposed on some customers.

This news article was automatically translated from Dutch to give Techzine.eu a head start. All news articles after September 1, 2019 are written in native English and NOT translated. All our background stories are written in native English as well. For more information read our launch article.