Insight Bite: EU Antitrust Watchdog Sanctions Broadcom

EU regulators have hit Broadcom with an order to stop applying “anti competitive provisions” in its dealings with six major customers.

The chipmaker, which is known for providing components for iPhones and laptops, has been under investigation since June, and now stands accused of blocking out competing suppliers of chipsets for modems and TV set-top boxes.

The European Commission has identified certain clauses in customer agreements that are said to prevent competing suppliers from joining the marketplace, and ultimately, preventing consumers from “reaping the benefits of choice and innovation.”

“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. We therefore ordered Broadcom to immediately stop its conduct.” said EU Commissioner Margrethe Vestager.

Though it is not yet determined whether or not Broadcom’s behaviour is breaking the law, the EU have suggested it is very likely to be, and have thus ordered the firm to stop enforcing exclusivity agreements while the investigation continues. In response, Broadcom has said it  disagrees with the commission’s allegations and will challenge the order in court.

A rarely used action, the order is the first issued by the European Commission in 18 years, and indicates the increasingly aggressive approach of European authorities in regulating technology firms.

Antitrust authorities have tried to dislodge several large incumbent players in the digital world over the past few years.

Qualcomm, which Broadcom was blocked from taking over by Trump earlier this year, was fined $1.2 billion by the EU for deals it made with Apple to lock out competitors. Google was hit with a record $4.95 billion fine in July for using the Android operating system to block rivals, and Apple is thought to be under investigation from EU antitrust authorities after Spotify claimed that it abuses its App Store dominance to favour its own Apple Music service.

Depending on how the Broadcom sanction pans out, it could form a precedent for antitrust authorities taking action against large tech companies like these in the coming years.

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