Margrethe Vestager – Photo © European Union 2020
(BRUSSELS) – The EU Commission accepted commitments by Broadcom Wednesday to suspend exclusivity agreements and/or leveraging provisions for Systems-on-a-Chip used in TV set-top boxes and Internet modems.
“Today’s decision legally binds Broadcom to respect the commitments,” said EC vice-president in charge of competition Margrethe Vestager: “They will ensure that existing chipset makers competing with Broadcom and potential new entrants will be able to compete on the merits.
Producers of set-top-boxes and Internet modems, telecom and cable operators and ultimately consumers will benefit from competition between chipmakers in terms of lower prices and more innovative products.”
The Commission initiated proceedings in 2019 into alleged abuse of dominance by Broadcom, concluding that interim measures were necessary to prevent serious and irreparable damage to competition from occurring in the worldwide markets for SoCs for (i) TV set-top boxes, (ii) xDSL modems, (iii) fibre modems, as well as (iv) cable modems.
The Commission took issue with certain exclusivity or quasi-exclusivity and leveraging arrangements imposed by Broadcom in relation to SoCs for TV set top boxes, xDSL and fibre modems. The decision ordered Broadcom to stop applying these provisions contained in agreements with six of its main customers and ordered the implementation of interim measures applicable for a period of three years.
Following imposition of interim measures, Broadcom offered commitments to address the Commission’s concerns. In April 2020, the Commission consulted stakeholders to verify the appropriateness of the proposed commitments. In light of the outcome of this market test, in July 2020 Broadcom amended and improved its proposed commitments.
The Commission says Broadcom’s final commitments will ensure that other companies can compete on the merits in the markets at stake and that consumers can benefit from lower prices and innovative products.
The commitments are binding vis-à-vis all device manufacturers (so called original equipment manufacturers, or OEMs) and include products not covered by the interim measures decision. More specifically:
At European Economic Area (EEA) level, Broadcom will:
- Not require or induce by means of price or non-price advantages an OEM to obtain any minimum percentage of its EEA requirements for SoCs for TV set-top boxes, xDSL modems and fibre modems from Broadcom; and
- Not condition the supply of, or the granting of advantages for, SoCs for TV set-top boxes, xDSL modems and fibre modems on an OEM obtaining from Broadcom another of these products or any other product within the scope of the commitments (i.e. SoCs for cable modems, Front End Chips for set-top boxes and modems and/or Wi-Fi Chips for set-top boxes and modems).
At worldwide level (excluding China), Broadcom will:
- Not require or induce an OEM by means of certain types of advantages to obtain more than 50% of its requirements for SoCs for TV set-top boxes, xDSL modems and fibre modems from Broadcom; and
- Not condition the supply of, or the granting of advantages for, SoCs for TV set-top boxes, xDSL modems and fibre modems on an OEM obtaining from Broadcom more than 50% of its requirements for any other of these products, or for other products within the scope of the commitments.
Broadcom must comply with the commitments within 30 days. The commitments will apply for a period of seven years.
More information, including the full text of today’s Article 9 Commission decision and the full version of the commitments will also be available on the Commission’s Competition website, in the public case register under the case number AT.40608.
