U.S. chipmaker Broadcom Inc is laying a bet to shun its exclusivity deals with modem and TV manufacturers to put an EU antitrust investigation to an end and also avoid to be heavily fined.
Broadcom is a manufacturer of chips used in smartphones, computers and networking equipments to power them and is also a main supplier to tech giant like Apple Inc. But the chipmaker deals with six companies to buy only from it or buy most portion of their requirement from it last year brought the company under the radar of EU competition commission.
The competition enforcer started an investigation in June last year and issued order to halt such practice till the conclusion of the investigation to find out whether businesses make such deals to avoid competition.
It was for the first time in almost two decades when EU regulators issued an interim order to stop specific business deal, and it also warned companies that because of the markets moving at faster pace, such order could happen to be issued more frequently against major technology companies.
While making agreements with TV and modem makers, Broadcom used to be offering those firms with incentives, pushing them to purchase more than half of their required number of chips or modems from the company. But the company no made commitment of not offering such incentives to companies in Europe for their local as well as international productions.
Competition authorities usually concentrate on controversial tactics of the businesses like discounts or other incentives to encourage purchaser for exclusivity or to put minimum-order conditions because such practices are more prone to be hurting smaller rivals.
Broadcom said its commitment has addressed main concerns of the Commission and it is expecting the investigation to be closed before end of this year, which could fine the chip maker up to 10% of its global revenue if found to be guilty of violating European competition laws.