Broadcom settles FTC broadband chip monopoly charges

scales court
Broadcom struck a similar settlement agreement with the European Commission covering the same products in October 2020. (simpson33/iStock/Getty Images Plus)

U.S. semiconductor company Broadcom struck a deal with the Federal Trade Commission (FTC) to settle claims it monopolized the market for broadband and video chips, agreeing to change its business practices going forward.

Broadcom said in a statement to Fierce it disagreed that its actions violated the law but “we are pleased to move toward resolving this broadband matter with the FTC on terms that are substantially similar to our previous settlement with the EC [European Commission] involving the same products.” It added “we are equally pleased that the FTC investigation into our other businesses has been closed without action.”

In its complaint against the company, the FTC specifically accused Broadcom of holding a monopoly over sales of chips used to deliver broadband internet and television services. It added in a press release the silicon products in question comprise “the core circuitry that run traditional television broadcast set top boxes, as well as DSL and fiber broadband devices.”

RELATED: FTC widens antitrust probe of Broadcom

The FTC alleged that since 2016 Broadcom has used long-term exclusivity agreements with customers, including service providers and OEMs, to compel the use of its products. The agency claimed Broadcom threatened to retaliate against “disloyal” customers by charging higher prices, withholding access to its products or cutting off support for previously purchased products.

“In all, Broadcom entered exclusive or near-exclusive agreements with at least ten OEMs, which collectively are responsible for a majority of STB and broadband device sales worldwide, and even higher percentages of STB and broadband device sales in the United States,” the FTC wrote in its complaint. “Through these contracts and coercive tactics, Broadcom foreclosed rivals from a substantial share of the relevant product markets and harmed competition in these markets.”

A proposed settlement deal with the FTC would prohibit Broadcom from striking certain types of exclusivity agreements with customers for the aforementioned chips going forward and prevent the company from retaliating against customers which ink deals with its competitors.

In October 2020, Broadcom agreed to suspend existing exclusivity agreements with customers and promised not to enter new ones in order to end a European Commission investigation into the company’s alleged anticompetitive conduct in the set top box and modem chip markets.