The U.S. Federal Trade Commission has sued chip maker Broadcom for allegedly abusing its monopoly on semiconductor components. A recent complaint accuses Broadcom of threatening to charge higher prices, refuse technical support, or suspend chip sales if its customers purchase other products from competing companies.
As of 2016, Broadcom claimed to enter into “exclusive or near-exclusive” agreements with at least 10 companies that manufacture set-top boxes and broadband devices such as modems. It argued that these “strategic” partners use different Broadcom components, even if they were not the best or cheapest option for a particular device. Non-exclusive “tactical” partners were charged higher prices for slower product delivery and customer support.
When manufacturers ask cable and Internet service providers such as AT&T and Verizon to purchase their products, the complaint said Broadcom “actively followed” whether any of these products included components from Broadcom’s competitors. “Broadcom informed customers that infidelity from even a single offer for a single relevant product could mean the terms of strategic partners,” the FTC argues.
In one case, Broadcom was alleged to retaliate against a company that had not yet agreed to the exclusivity, suspending “all supply and support” when it made an offer that included a non-Broadcom component. The company claimed to have withdrawn the offer and signed an exclusivity agreement.
The FTC wants Broadcom sign the consent order agrees to withdraw its restrictive exclusivity agreements. In the opinion Limit, Broadcom announced its willingness to cooperate. “We are pleased to move to resolve this broadband issue with the FTC on terms that are substantially similar to our previous agreement with the EC with the same products,” the spokesman said, referring to the 2020 agreement in cooperation with the European Commission. The EC Treaty included a commitment to suspend all exclusive or quasi-exclusive agreements and to refrain from signing new agreements on similar terms for a period of seven years.
A spokesman said Broadcom was “equally pleased” that the FTC had not begun an investigation into other parts of its business; the agency was reportedly considered possible anti-competitive practices areas such as sales of Wi-Fi chips. “While we disagree that our actions violate the law and disagree with the FTC’s descriptions of our business, we look forward to this and continue to focus on supporting our customers in an environment of accelerated digital change.”
In its application, the FTC claims that Broadcom wanted to foreclose potential competitors at a turning point in the set-top box industry. The complaint states that Broadcom had a special dominant position in the market for traditional television set-top box components and faced more potential competition for streaming box components, a category that grew rapidly due to the disconnection of the TV line.
Broadcom argued that “with so many consumers cutting off, there are many other consumers who will continue to use broadcasts. [set-top boxes] for some time to come, ”and companies need support for these boxes for years to come. “Broadcom identified these threats and opportunities,” the complaint states, and used its power to ensure that the sales opportunities of potential competitors were “severely restricted.”