The FTC argues that Broadcom has an illegal monopoly in the chip industry. The American market watchdog also claims that the company is abusing its dominant position. The FTC has filed a settlement offer, which Broadcom appears to agree to.
In the complaint, the Federal Trade Commission alleges that Broadcom has a monopoly in three types of chips, which are used, for example, in set-top boxes and modems. This makes the chips important for television and internet providers, among other things. The company is also said to be “one of the few” suppliers of some related chips, such as Wi-Fi chipsets.
The complaint alleges that Broadcom illegally maintained its power in the three “monopolized markets” by entering into long-term agreements with OEMs and providers. These agreements required customers to purchase, use or offer Broadcom’s chips on an “exclusive or near-exclusive” basis, the FTC said. The agreements would also prevent customers from buying chips from Broadcom’s competitors.
The company would thus abuse its dominant position, also because, according to the market watchdog, Broadcom threatened ‘retaliation’ against customers who also bought chips from competitors. “Broadcom accomplished these restrictive contract terms in part by threatening various retaliatory measures against ‘disloyal’ customers, including withholding needed monopolized products, charging higher prices for those products, or withholding support for previously purchased products,” the FTC said. .
Virtually the entire FTC voted to file the charges, although recently sworn in FTC chairman Lina Khan did not vote. Parallel to the complaint, the market watchdog also publishes a kind of settlement proposal, in the form of a consent order. This proposal sets some requirements for Broadcom. For example, the chip company may no longer require its customers to purchase components primarily or exclusively from Broadcom. The settlement proposal also prohibits Broadcom from retaliating against customers who purchase products from competitors.
Broadcom appears to agree to the settlement offer, although the company does not agree with the FTC’s claims. The chip manufacturer said in a statement to Reuters that it is happy to resolve the matter. “While we disagree that our actions violated the law and we disagree with the FTC’s characterizations of our activities, we look forward to putting this matter behind us,” a Broadcom spokesperson said. .
In October 2019, the chip manufacturer received a similar complaint from the European Commission, in which European Commissioner Margarethe Versstager also stated that Broadcom is abusing its dominant position in the chip sector for modems and set-top boxes. The company then reached a similar agreement with the European Commission late last year.