FTC approves order forcing Broadcom to stop 'anticompetitive' semiconductor monopoly

Chips key to TV and broadband services are at the heart of the complaint.
Written by Charlie Osborne, Contributing Writer

The US Federal Trade Commission (FTC) has approved a final order demanding that Broadcom cease its allegedly anticompetitive practices in the semiconductor industry. 

On Thursday, the trade watchdog said the order will stop the San Jose, Calif.-based hardware giant from entering into exclusive deals that prevent television and internet service providers (ISPs) from shopping elsewhere for key components. 

The FTC's complaint was first announced in June this year. According to the agency, Broadcom has "illegally monopolized markets for semiconductor components used to deliver television and broadband internet services through exclusive dealing and related conduct."

There are three types of semiconductor components that came under the FTC's radar, all of which are required to deliver television and broadband services to US consumers via set-top boxes, DSL, and fiber.  

According to the regulator (.PDF), in the past, Broadcom secured "restrictive" contracts to stop rival companies from competing in this lucrative hardware arena. So-called "monopolized products" would be allegedly withheld, command a higher price point, or support would no longer be offered based on previous purchases if "disloyal" companies moved elsewhere. 

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

Now a public comment period has finished, the final order will settle the FTC's charges against Broadcom. 

Under the terms of the FTC's decree, Broadcom is not permitted to enter into "certain types" of exclusive or loyalty agreements with clients.

"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 FTC says. "The final order prohibits Broadcom from retaliating against customers for doing business with Broadcom's competitors."

In September, Broadcom reported Q3 earnings including $6.78 billion in revenue with non-GAAP diluted earnings per share of $6.96. 

ZDNet has reached out to Broadcom and we will update when we hear back. 

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