The EC announces interim measures in Broadcom investigation for the first time in 18 years
On 26th June the European Commission announced it opened an antitrust investigation into Broadcom and is seeking to impose interim measures in TV and modem chipsets markets.
The Commission has gathered information indicating that Broadcom may be implementing a range of exclusionary practices in relation to these products.
It's the first time in a long time that the Directorate-General Competition has invoked Article 102, noting that: "… In this way, the Commission can avoid that the suspected anti-competitive behaviour damages the market irreparably before it has had time to sanction such behaviour." It has been 18 years since the Commission last adopted interim measures in an antitrust case, and since then it has fined tech companies including Microsoft, Intel and Google for abuses of dominance, with varying degrees of effectiveness – but never imposing interim measures to stop the harm.
Anna Morfey, Partner at Hausfeld London, observes:
"The Commission's investigation into Broadcom is looking at the company's IP strategy, bundling practices and exclusivity clauses in its contracts with customers. The "interim measures" are targeting suspension of the exclusivity clauses pending the Commission's full investigation of them. The announcement highlights the Commission's concern is that, unless these clauses are suspended, there is a serious risk that Broadcom's competitors will be driven out of the market by the time its full investigation is concluded."
"Competition regulation mustn't deal in corpses – it is there to keep competition alive. Interim measures are sometimes needed to achieve this, particularly in the fast-moving tech sector, and it is encouraging to see the Commission using them again after so many years."
The Commission can impose fines of up to 10% of global turnover on undertakings that have been found to abuse their dominant position and in case of global companies this can lead to substantial penalties. In relation to Google, for example, these fines were enormous: the Commission fined Google for over €8 billion in the past three years for abuses relating to Google Shopping (2017), Android (2018) and Adsense (2019).
Competition regulators worldwide are also increasingly coordinating their enforcement priorities, and routinely share information on probes. That is of course essential if anti-competitive conduct – which is not confined to a single jurisdiction – is to be tackled. Broadcom is a good example: with the Federal Trade Commission also investigating Broadcom over different areas of its portfolio, we can only assume that the European Commission and the FTC are coordinating, although each of course has their own priorities and will assess their case under the laws applicable to their jurisdiction.
In the Broadcom case, the Commission seems to be acutely aware of the need for speed in order to avoid the market tipping irrevocably in favour of the dominant company to the detriment of competitors and, ultimately, millions of consumers worldwide. Many will be watching the investigation with interest.
CDR Article (subscription only).
Anna Morfey was interviewed by Angela Bilbow, CDR Magazine. These are her comments in full.
The Hausfeld teams in London, Berlin and Düsseldorf often act for complainants and in damages claims against major tech companies including Google, Amazon, Facebook and Apple.