The U.S. Federal Trade Commission (FTC) recently filed a complaint alleging U.S. chip maker Broadcom had illegally practiced monopolistic practices that included “exclusive dealing and related conduct” related to video and broadband semiconductors.
The FTC also filed a proposed consent order that would resolve the matter, provided that Broadcom “stop requiring its customers to source components from Broadcom on an exclusive or near exclusive basis,” the commission said in a statement. The proposed consent order is open to public comment.
The FTC asserts that Broadcom has a monopoly position in the supply of core circuitry semiconductors for traditional set-top boxes as well as for DSL and “fiber broadband” (likely PON) equipment. The company also has near monopoly status in the markets for core circuitry for streaming set-top boxes and cable broadband devices, along with Wi-Fi and front-end chips for both set-top boxes and broadband devices, according to the commission.
Broadcom exploited this status, the FTC charges, by entering into agreements with OEMs and service providers that required customers to purchase, use, or bid Broadcom’s chips on an exclusive or near-exclusive basis. At least 10 OEMs were bound be such agreements, which Broadcom used its monopoly status to create, according to the FTC. The agreements illegally prevented other chip manufacturers from competing against Broadcom in the affected markets, the commission charges.
The consent order states that Broadcom admits to what the agreement terms “jurisdictional facts” but not that any laws had been violated. “We are pleased to move toward resolving this Broadband matter with the FTC on terms that are substantially similar to our previous settlement with the EC involving the same products," said Broadcom in a statement. "While we disagree that our actions violated the law and disagree with the FTC’s characterizations of our business, we look forward to putting this matter behind us and continuing to focus on supporting our customers through an environment of accelerated digital transformation. We are equally pleased that the FTC investigation into our other businesses has been closed without action.”
The FTC vote to issue the complaint and accept the proposed consent order for public comment was 4-0-1, with Chair Lina Khan not participating.
“Today’s complaint reflects the Commission’s commitment to enforcing the antitrust laws against monopolists, including in high-technology industries,” said FTC Bureau of Competition Acting Director Holly Vedova. “America has a monopoly problem. Today’s action is a step toward addressing that problem by pushing back against strong-arm tactics by a monopolist in important markets for key broadband components. There is much more work to be done and we need the tools and resources to do it. But I have full confidence in FTC staff’s commitment to this effort.”
Comments on the proposed consent agreement will be accepted for 30 days after the order is posted in the Federal Register, which the FTC said on July 2 would occur “shortly.”