The European Union has opened an investigation to determine if Broadcom Corp. engaged in anticompetitive business practices.  

The European Commission, the EU’s executive branch and the body responsible for antitrust enforcement, made the probe public today. Regulators are focusing their attention on how Broadcom has been maintaining its position as the dominant maker of chips for modems and TV set-top boxes. The San Jose, California-based semiconductor giant is suspected of harming competitors through restrictive supply contracts with customers.

According to the EU, Broadcom added exclusivity clauses to its agreements with seven modem and set-top box makers. The company is also suspected of offering incentives such as rebates to customers in exchange for them buying more of its chips. And in some cases, the EU believes, Broadcom may have set minimum purchase requirements for deals and bundled multiple products into transactions.

The focus of the investigation extends beyond the chipmaker’s supply contracts, as well. The EU will look into whether Broadcom engaged in “abusive IP-related strategies” and evaluate if the company deliberately made it difficult to use its technologies with products from other firms.

“We suspect that Broadcom, a major supplier of components for these devices, has put in place contractual restrictions to exclude its competitors from the market,” EU competition commissioner Margrethe Vestager said in a statement. “This would prevent Broadcom’s customers and, ultimately, final consumers from reaping the benefits of choice and innovation.”

In a sign of the seriousness of the probe, the EU plans to order an immediate halt to the offending business practices even though the investigation is still ongoing. The Wall Street Journal reported that it’s the first time European regulators have taken this step in 18 years. The justification for the move is that Broadcom’s rivals may suffer “irreparable harm” if they have to wait until the probe concludes, which could potentially take years.

Regulators on the other side of the pond are also looking into the chipmaker’s business tactics. In early 2018, the U.S. Federal Trade Commission launched an antitrust investigation focused on the contractual terms Broadcom had imposed on some customers. Agency documents obtained by Bloomberg last month suggest that FTC officials may expand the scope of the probe.

Photo: Florian Knodt/Flickr