Antitrust: Commission seeks feedback on commitments offered by Broadcom concerning TV set-top box and modem chipset markets

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The European Commission invites comments from interested parties on commitments offered by Broadcom to address competition concerns in relation to Broadcom’s conduct in various TV set-top box and modem chipset markets.

Executive Vice-President Margrethe Vestager, in charge of competition policy, said: “TV set-top boxes and modems are part of our daily lives, for both work and for leisure, even more so in these days of confinement. We are assessing whether the commitments proposed by Broadcom after our interim measures decision of last October will ensure that final consumers reap the benefits of choice and innovation on these markets. We want to hear stakeholders’ views before taking any decision.”

In June 2019, the Commission initiated proceedings into alleged anti-competitive practices by Broadcom and at the same time issued a Statement of Objections seeking the imposition of interim measures. In October 2019, the Commission took a decision concluding that interim measures were warranted to prevent serious and irreparable damage to competition from occurring in the worldwide markets for Systems-on-a-Chip (“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 and quasi-exclusivity arrangements imposed by Broadcom in relation to SoCs for TV set top boxes, xDSL modems and fibre modems. The Commission also identified provisions that leveraged Broadcom’s market power.

The Commission 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.

The proposed commitments

Broadcom has offered the following commitments to address the Commission’s competition concerns:

• At worldwide level (excluding China), Broadcom committed:

a)   Not to require or induce by means of certain type of advantages an original equipment manufacturer (OEM) to obtain more than 50% of its requirements for SoCs for TV set top boxes, xDSL modems and fibre modems from Broadcom; and

b)   Not to 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 which were within the scope of the interim measures Statement of Objections or Decision (i.e. SoCs for cable modems, Front End Chips for STBs and modems and/or Wi-Fi Chips for STBs and modems).

• At European Economic Area (EEA) level, Broadcom committed:

a)   Not to require or induce by means of certain type of advantages an OEM to obtain more than 50% of its EEA requirements for SoCs for TV set top boxes, xDSL modems and fibre modems from Broadcom; and

b)   Not to 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 interim measures Statement of Objections or Decision.

The commitments also include additional provisions with regard to obligations and inducements to bid equipment based on Broadcom products as well as certain commitments with regard to service providers in the EEA.

The commitments would apply for a period of five years. Broadcom also committed not to circumvent or attempt to circumvent these commitments in any way.

As regards the monitoring of the commitments’ implementation, Broadcom would submit to the Commission a report on their implementation within two weeks from the date of their implementation, and on an annual basis thereafter for the duration of the commitments.

A summary of the proposed commitments will be published in the EU’s Official Journal. Interested parties can submit their views on the commitments within six weeks of their publication in the EU’s Official Journal. The full text of the commitments will be available on the case website.

Background

Systems-on-a-Chip combine electronic circuits of various components in a single unit, which constitutes the “brain” of a TV set-top box or a modem. They are essential to bring television signals and connectivity to consumers’ premises.

On 26 June 2019, the Commission opened a formal antitrust investigation into alleged anticompetitive practices by Broadcom in the area of components for TV set-top boxes and residential gateways. On the same day, the Commission addressed a Statement of Objections to Broadcom outlining its preliminary assessment relating to specific aspects of Broadcom’s behaviour that was subject to the Commission’s investigation, and its intention to impose interim measures in that regard pursuant to Article 8 of the Antitrust Regulation.

Article 102 of the TFEU prohibits the abuse of a dominant position that may affect trade within the EU and prevent or restrict competition. The implementation of this provision is defined in the Antitrust Regulation (Council Regulation No 1/2003), which can also be applied by the national competition authorities.

Pursuant to Article 8(1) of the Antitrust Regulation, interim measures may be imposed if at first sight there is an infringement of competition law rules, as well as an urgent need for protective measures due to the risk of serious and irreparable harm to competition.

Article 9(1) of the Antitrust Regulation 1/2003 enables companies under investigation by the Commission to offer commitments in order to meet the Commission’s concerns.

If the market test indicates that the commitments are a satisfactory way of addressing the Commission’s competition concerns, the Commission may adopt a decision making the commitments legally binding on Broadcom (under Article 9 of the EU’s antitrust Regulation 1/2003). Such a decision would not conclude that there is an infringement of EU antitrust rules but would legally bind Broadcom to respect the commitments it has offered.

If a company breaks such commitments, the Commission can impose a fine of up to 10% of the company’s worldwide turnover, without having to find an infringement of the EU antitrust rules.

A summary of Broadcom’s proposed commitments will be published in the EU’s Official Journal. More information, including 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.