FTC Charges Broadcom With Illegal Monopolization of the Chip Industry

Photo courtesy of Justin Sullivan ( Getty Images ).Broadcom was accused of monopolizing the market for semiconductor components by the Federal Trade Commission, according to the agency's Friday announcement.AdvertisementThe commissions complaint states that Broadcom entered into long-term loyalty and exclusivity agreements with service providers and original equipment manufacturers to stop them from purchasing chips from Broadcoms competitors. FTC investigation found that Broadcom has been making deals with at least 10 TV set-top boxes manufacturers and broadband device makers since 2016. FTC claims that the company threatened customers with retaliation if they used a competitor's product. Nonexclusive customers would be subject to higher prices, slower delivery times, and less responsive customer service.Broadcom created unsurmountable barriers to companies trying to compete by entering loyalty and exclusivity agreements at key customers at two levels in the supply chain, according Friday's press release.According to the FTC, Broadcom was required to stop entering into these types of contracts or condition access to its chips on exclusivity or loyalty agreements. Broadcom will also be forbidden from retaliating against customers who do business with it competitors.Holly Vedova (acting director of FTCs Bureau of Competition), stated that America is plagued by a monopoly problem. Today's action is a first step towards addressing this problem by fighting against strong-arm tactics of a monopolist on important markets for key components of broadband. We still have much work ahead of us and need the resources and tools to make it happen. However, I am confident in the FTC staff's dedication to this effort.The consent order proposal is still subject to public comment and final review by the commission. Broadcom, on its part, has denied the FTC's claims and indicated that it is willing to work with them in a settlement. Broadcom resolved an antitrust dispute similar to the one with the European Union in October. It agreed to cease pushing exclusivity agreements for chips used in modems and TV set-top boxes for the next seven year.Broadcom stated in a statement that it was pleased to reach an agreement with the FTC to resolve the Broadband matter. These terms are substantially the same as the settlement we reached with the [European Commission] regarding the same products. We disagree with the FTC's description of our business and we disagree with our actions violating the law. However, we look forward putting this matter behind and focusing on our customers in an environment of digital transformation.