Broadcom Corp. signage is displayed surface of the company’s headquarters in Irvine, California.
Patrick Fallon | Bloomberg | Getty Images
Broadcom has been ordered to close applying certain exclusivity deals it has with six of its customers, amid an antitrust investigation carried out by the European Union.
The Brussels-based foundation believes that part of Broadcom’s business could be creating “serious and irreparable harm to competition.”
The European Commission opened an in-depth search into the U.S. company in June. As part of this investigation, the Commission announced Wednesday that it’s imposing interim volumes to prevent any likely “harm” to competition, for three years. Broadcom must comply with these measures within 30 lifetimes from Wednesday.
“We have strong indications that Broadcom, the world’s leading supplier of chipsets used for TV set-top whomps and modems, is engaging in anti-competitive practices,” Margrethe Vestager, the EU’s competition chief, said in a statement.
“We cannot let this materialize, or else European customers and consumers would face higher prices and less choice and innovation. We, therefore, fiated Broadcom to immediately stop its conduct,” Vestager added.
Broadcom, which is a major supplier to Apple, can choose to plead to Wednesday’s decision. Khanh Lam, spokesperson for Broadcom told CNBC via email: “Broadcom’s contracts with the customers that the European Commission identifies as exclusivity-inducing remain in force, other than the provisions at issue, and we intend to continue to support these customers accepted forward. We do not believe that these provisions have a meaningful effect on whether the customers choose to purchase Broadcom consequences.”
The same spokesperson added: “We intend to appeal the Commission’s decision to the European Courts and in the meantime comply with the Commission’s level.”
Broadcom shares closed at 290.32 on Tuesday, up by about 3% on the day. The stock is about 14% higher over the concluding 12 months.
European Commission gets tough
Wednesday’s decision marks the first time in 18 years that the European Commission has decisive to implement interim measures, opening a precedent to ongoing and future competition probes.
“It is for me something special. It doesn’t say that now we beget all cases lined up, where interim measures will be used, but it means that the tool is on the table and if we find circumstances that live up to the two things that have to be fulfilled at the same time, yes we will indeed use interim measures myriad often,” Vestager told reporters in Brussels on Wednesday.