EC uses ‘interim measures’ on Broadcom to curb anticompetitive behavior

It is the first time since 2001 the EU’s executive body has imposed “interim measures,” a legal mechanism that stops companies from engaging in suspected anticompetitive behavior before the outcome of an investigation.

“Interim measures are one way to tackle the challenge of enforcing our competition rules in a fast and effective manner. Whenever necessary, I am therefore committed to making the best possible use of this important tool.”

Margrethe Vestager, Commissioner, European Commission

The Commission said it had to intervene “to prevent serious and irreparable harm” caused by the company’s conduct.

Broadcom, the world leader in the supply of chipsets for TV set-top boxes and modems, is “at first sight” dominant in three different markets—namely TV set-top boxes, fiber modems, and xDSL modems.

While being dominant is not an infringement of competition law, abusing that position is.

The Commission—which began its investigation in October 2018—believes Broadcom’s use of exclusive and quasi-exclusive clauses to lock customers into contracts by offering them rebates, early access to its technology, and premium technical support are anti-competitive.

In a statement, Margrethe Vestager, the EU’s Commissioner in charge of competition policy, said: “Broadcom’s behaviour is likely, in the absence of intervention, to create serious and irreversible harm to competition. We cannot let this happen, or else European customers and consumers would face higher prices and less choice and innovation. We therefore ordered Broadcom to immediately stop its conduct.”

The Commission has told Broadcom to cease applying these contract terms for the next three years, or until Brussels finishes its probe—a process that can also take years—as well as “refrain from implementing punishing or retaliatory practices” that effectively force customers to stay locked into the same or similar arrangements.

The company has 30 days in which to comply.

While Broadcom has rejected the Commission’s claims and said it will appeal the decision, the company also said it will comply with the Commission’s order.

The use of interim measures represents a potentially powerful—but hitherto underused –weapon in the EU’s arsenal to curb anticompetitive behavior and may resurface in the Commission’s ongoing probes into the possible abusive practices carried out by Big Tech companies.

Vestager has acknowledged her previous approach of fining Big Tech companies billions of dollars has often done little to restore fair competition because the remedies arrived long after companies had already driven rivals out of the market and built formidable, dominant positions.

“Interim measures are one way to tackle the challenge of enforcing our competition rules in a fast and effective manner,” said Vestager. “Whenever necessary, I am therefore committed to making the best possible use of this important tool.”

While the Commission does have the power to break up companies if they act as monopolies, it does not appear to be a route Vestager wants to embark on—at least not yet.

Instead, she has signaled she may be in favor of the Commission having similar powers to national competition authorities in the United Kingdom and The Netherlands, which have the authority to reorganize a marketplace before consumers or competitors suffer.