U.S. Chip Manufacturer Broadcom Also Faces Antitrust Investigation: Whether Using Exclusive Restrictive Means to Hinder Competitors?

American chip manufacturer Broadcom is facing a formal antitrust investigation by the European Union.

On June 26th, the European Commission announced on its website that the EU antitrust department will investigate whether Broadcom has used exclusionary restrictions to hinder competitors in the TV and modem chip markets, violating relevant EU regulations.

Reuters reported that this investigation could result in substantial fines for Broadcom and lead to the termination of such practices.

The European Commission stated that it plans to implement interim measures during the investigation to avoid causing "serious and irreparable harm" to the market.

According to Reuters, Broadcom responded that the company believes it has always complied with European competition rules and that these concerns are unfounded.

Broadcom is headquartered in San Jose, California, USA, and its chip products are primarily used for Wi-Fi, Bluetooth, and GPS connectivity in smartphones.

European Competition Commissioner Margrethe Vestager stated in the European Commission's announcement that Broadcom's anti-competitive practices would prevent its customers and consumers from benefiting from diverse choices and innovations.

Specifically, Broadcom's practices include imposing exclusive purchasing obligations, tying discounts or other incentives to minimum purchase or product requirements, abusing intellectual property strategies, and intentionally making Broadcom products difficult to use alongside those of competitors.

The European Commission noted that because Broadcom may dominate the TV and modem chip markets, and its agreements with seven major customers have led these companies to purchase chips exclusively from Broadcom, interim measures are necessary.

The Wall Street Journal reported that it is rare for interim measures to require a company to immediately cease certain actions. The Commission's order marks the first time in 18 years that the EU competition authority has implemented such interim measures.

In filings with U.S. regulators, Broadcom stated that it expects the European Commission's actions will not significantly impact its set-top box or broadband modem businesses and that no measures by the Commission will hinder Broadcom from selling any products.

Reuters noted that the European Commission can impose fines on companies violating EU regulations, with penalties reaching up to 10% of the company's global revenue. In recent years, both Google and Qualcomm have faced substantial fines from the EU for anti-competitive behavior.