Broadcom came to terms with European Union watchdogs to end the year-long investigation of its alleged anticompetitive practices. As part of the agreement, the chipmaker will refrain from selling its semiconductors in exclusive packages for seven years.
The EU regulatory body indicated it would apply measures it used in the Broadcom probe in its cases against America’s Big Tech firms.
Broadcom Settles with EU Regulators
Broadcom’s settlement with the EU’s European Commission brings an end to a year-long inquiry into the corporation’s conduct.
In October 2019, European Commissioner Margrethe Vestager declared she would investigate the semiconductor vendor for engaging in antitrust activity. Specifically, the official took issue with the firm’s use of bundles and rebate programs to sell its modem and set-top box chips. Vestager also filed an injunction to force the company to pause the questioned practices while the inquiry took place.
Broadcom announced it would comply with the EU’s order last fall while maintaining its probe had no merit.
A year later, the regulatory organization revealed it would close its investigation into the chipmaker. Although the body had the authority to levy a fine totaling 10 percent of the firm’s annual revenue, the two sides came to a more amicable agreement. In fact, the probe’s outcome seems to have left Broadcom in a strong position.
The corporation out-earned every other fabless semiconductor manufacturer in Q2 2020 and increased its Q3 revenue by $310 million year-over-year. Since the company enjoyed those successes while being prevented from offering chip bundles, the sales strategy is not essential to its business.
Having negotiated an end to the EU probe, the firm can focus on extending its growth streak to Q4 and beyond.
The Value of Compromise
The Broadcom inquest concluding also frees up the European Commission’s resources for other investigations. The ending of its probe into the chipmaker may have prompted a change in how it handles its inquiries. Vestager mused she might deploy injections in her cases against Amazon, Alphabet, Apple, and Facebook.
Before the Broadcom probe, the agency had not issued temporary sanctions against an inquiry target since 2001. But Vestager noted injections might be more effective at achieving the Commission’s objectives than handing out fines. Given how the investigation worked out, the official’s notion is worth exploring.
Ultimately, the European Union resolved its issues with Broadcom by reaching a compromise rather than waging a decade-long legal battle. That means both sides found a way to serve consumer interests without spending millions of dollars on court costs. Hopefully, the efficiency of that outcome will inform the actions of EU and U.S. regulators going forward.