FTC OKs order against Broadcom in chip monopoly case

The US Federal Trade Commission (FTC) has approved a final order banning Broadcom from abusing its "monopoly power" over a range of chips that power set-top boxes, modems and gateways.

By a 3-0 vote on Thursday, the FTC put its seal on the 19-page order following a public comment period. The order prohibits the semiconductor giant from making exclusive deals that prevent TV and broadband providers from buying silicon from other chip suppliers. The order, which comes after the agency filed a complaint against Broadcom in June, also prohibits the chipmaker from retaliating against customers that buy silicon from its rivals.

"This conduct supplemented the foreclosure effect of its written agreements," the FTC said. "Through these contracts and coercive tactics, Broadcom foreclosed rivals from a substantial share of the relevant product markets and harmed competition in these markets."

So, the FTC decree bans Broadcom from entering into "certain types" of exclusive or loyalty agreements with customers or punishing customers that refuse to abide by such agreements.

Figure 1:

The Broadcom Limited company logo is shown outside one of their office complexes in Irvine, California. Photo by REUTERS/Mike Blake.

"Broadcom also must stop conditioning access to or requiring favorable supply terms for these chips on customers committing to exclusivity or loyalty for the supply of related chips," the agency said. "The final order prohibits Broadcom from retaliating against customers for doing business with Broadcom's competitors."

Broadcom's major US customers cited in the original complaint included AT&T, Charter Communications, Comcast, Dish Network and Verizon. On the cable side, Broadcom has sought, and in some cases secured, stringent joint development deals (JDAs) related to the silicon it is crafting for the new DOCSIS 4.0 specifications, industry sources have told Light Reading. Those JDAs, sources added, have become a point of contention among certain cable operators.

In a previous statement to Light Reading when the FTC complaint was filed, Broadcom said it is "pleased to move toward resolving this Broadband matter with the FTC on terms that are substantially similar to our previous settlement with the EC [European Commission] involving the same products."

"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," Broadcom continued. "We are equally pleased that the FTC investigation into our other businesses has been closed without action."

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— Alan Breznick, Cable/Video Practice Leader, Light Reading