EU orders Broadcom to Alleged Alleged Anti-competitive Practices

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BRUSSELS – The European Commission opened a quest for a formal antidote

Broadcom
Inc.,

AVGO 1.73%

The chip manufacturer claimed that the chip maker dominated the market for chips used in modem and TV crop boxes to reduce competition.

The commission, the main anti-competitive regulator in Europe, said it would take the first step to order the company to end certain practices that it claims to be anti-competitive, before any results in the probe. The commission injunction is the first time that the EU's competition authorities have implemented such interim measures in 18 years.

Some critics urged the commission to use these powers more often as formal competition events can take many years. Left unchecked during such a quest, any anti-competitive behavior could permanently damage a market before judging authorities consider.

Recent Commission officials have stated that they were assessing current cases for possible actions. The Commission faced a legal challenge in relation to their last use in 2001. The powers were legally formulated in 2003, but have never been tested since.

Wednesday's injunction relates to “exclusive” practices which the commission claims Broadcom uses to keep competitors at bay – including setting exclusive purchasing obligations for customers, granting rebates for minimum purchases and bundling some products.

“Broadcom has put in place contractual restrictions to exclude its competitors from the market,” said EU Commissioner Margrethe Vestager.

Broadcom stated that the investigation is of no merit and that it does not expect any material impact from the investigation into its affairs a broadband box or broadband modem.

“Broadcom's contracts with these customers will remain in place, with the exception of the provisions in question, and it intends to continue to support these customers,” said the company. The company said it would cooperate with the Commission.

Commission spokesman Ricardo Cardoso said Broadcom's "ongoing anti-competitive effects" contributed to urgent intervention "to prevent serious irreversible harm." against Broadcom.

“In these circumstances, it is important to intervene early” if the evidence supports action, Mr Cardoso said.

Write Daniel Michaels at daniel.michaels@wsj.com

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