Over the past two months, we have been hearing murmurs about Broadcom going about its business in a previously unheard of manner, squeezing out parallel chip providers either with promises of higher discounts for pure Broadcom devices or threatening with higher prices if equipment vendors do not do as they are told.
We advised one or two of these companies to get in touch with the European Commission DG4 and it looks like one or more of them have.
While we have heard this story multiple times, we have not been able to gather sufficient evidence to run with it as a story – it seems the era of CEO Hock Tan is all about the money and not at all about being fair to rivals.
Now the story has leaked out of the European Commission via news agencies Bloomberg and Reuters – as it gathers evidence by mailing questionnaires to Broadcom customers about just how Broadcom is going about its business.
It appears the European Union believes that Broadcom is using its market dominance to improperly pressure customers to buy only from Broadcom in a move which unfairly harms rivals.
So far this is just a preliminary enquiry, but enough people are openly talking about this that it is sure to move onto the complaint stage. Much of its appears to focus on chips inside set-top boxes and home gateways for cable and DTH pay TV providers.
One of these reports has it that the US Federal Trade Commission is also looking into Broadcom’s sharp practices, but we have no direct knowledge of that case.
The new Broadcom which came out of Avago merging with the old Broadcom had previously tried to buy Qualcomm, at a weak moment in its lifecycle, threatened by multiple regulators over its own sharp practices and by Apple for its expensive IPR – but the takeover was halted directly by intervention from Donald Trump the US President.
The EU has sent out a questionnaire asking if companies have been threatened with patent suits, or prices rises or the withdrawal of rebates if they did not exclusively use Broadcom chips. Simply the sight of such contracts will be enough to convict Broadcom in the Commission’s eyes.
Meanwhile, after the failed Qualcomm merger Broadcom has been chasing software firms, initially CA Technologies, in a $19 billion deal, that shareholders and critics simply hate and which has crashed its share price. Both companies received antitrust clearance from the EU earlier this month, the last regulatory approval needed for the deal, but shareholder indifference may well see off this merger.