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Broadcom Hit With Interim Demands By EU In Antitrust Case

Broadcom Hit With Interim Demands By EU In Antitrust Case
The exclusivity clauses with TV and modem makers that the US chipmaker Broadcom possess has been asked to be scrapped by EU antitrust regulators so that no  irreparable harm to the market is done even as the regulators are probing whether this business strategy and some others have been created to put rivals at a disadvantage.
The possibility of the dominance of Broadcom in the TV and modem chipset markets and business agreement between the US chip maker and the seven major clients which with the outcome that the companies were forced to purchase chips only from Broadcom has forced the European Commission to put in the so-called interim measures –the first in 18 years, the commission said.
Broadcom was delivered a statement of objections, or charge sheet by the EU competition enforcer on Wednesday. That document essentially describes the reasons for the requirement of such measures. Broadcom can reply in two weeks time. The US chipmaker can also seek a closed door hearing for putting up its defence.
The high bar proving lasting harm makes taking such measures quite rare. In 2001, German insurer IMS Health was imposed with similar interim measures by the Commission due to the possibility of serious and irreparable damage being caused to two rivals.
Wi-Fi, Bluetooth and GPS connectivity in smartphones is powered by the communications chips manufactured by the San Jose, California-based company.
Enforcers were sending a strong signal, said Commission chief economist Tommaso Valletti.
"This is good because it says to the company: you are doing something which is possibly noxious. Stop now. Immediate effect. To the extent this is foreclosing others, then it stops now, not in 10 years," Valletti said in a tweet.
There are a number of business practices that it would investigate, the Commission said. Such business practices would 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.
European Competition Commissioner Margrethe Vestager said in a statement that the customers of Broadcom – and eventually the consumers, are prevented from enjoying the benefits of choice and innovation because of the anti-competitive practices of the US chip maker.
While claiming that the concerns are "without merit", Broadcom said that it believes it complies with European Competition regulations. Board Broadcom does not expect that the Commission's move would have any material impact on its set-top box or broadband modem business, the company said in a filing with US regulators. Broadcom would not be prevented from selling its products because of the planned interim measures of the Commission, the company said.
According to EU rules, fines of up to 10 per cent of a company's global revenues for violation of EU regulations can be imposed by the Commission. In recent years, heavy fines were imposed by the EU on Alphabet unit Google and Qualcomm for violating anti-competition rules.

Christopher J. Mitchell

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