Semiconductor Maker Broadcom Inc Faces Charges Of Illegal Monopolization Of Chip Industry

The Federal Trade Commission of the United States has charged semiconductor maker Broadcom Inc with illegally monopolizing the chip industry. The regulator said in its complaint that the computer chip supplier used an exclusive deal to illegally monopolize the market. According to the commission, Broadcom threatened customers that they would end up paying extra if they purchase other products from its competitors. The company even told customers that it will refuse technical support and cut off chip sales if they buy products from competing companies. The FTC alleged that Broadcom struck exclusive or near-exclusive deals with around 10 companies in the past 5 years.

These companies were either manufacturing video set-top boxes or making modems or other broadband devices. As per the deal, these companies had to use several components of Broadcom even if they were not of superior quality or cheaper options were easily available in the market. Those who were not part of the exclusive deals had to wait for extra time to receive their product and were often charged more. The FTC said that Broadcom actively monitored when manufacturers would try for any bid with companies like AT&T and Verizon. “The semiconductor maker would communicate to its customers that disloyalty even in a single bid would result in loss of strategic partnership,” the regulator claimed. It also said that Broadcom wanted to keep potential competitors out of the set-top box industry. Broadcom always had dominance over the set-top box market. The regulator said that the chip maker never wanted to potential competitors to grow.

In one case, the chipmaker went on to stop all supply and support to a company that submitted a bid that included a non-Broadcom component. Following this, the company had to withdraw the bid and signed the exclusivity deal with Broadcom. The US regulator has now said that it wants the computer chip supplier to sign a consent order that it will withdraw its restrictive exclusivity agreements. According to some media reports, Broadcom has expressed its willingness to cooperate. “We are eager to resolve the matter with the US regulator. We will do this on terms of our settlement with the EC,” a spokesperson was quoted as saying by media reports. In the agreement with the EC, Broadcom agreed to suspend all exclusive or nearly exclusive deals and refrain from signing a new deal with such clauses.