FTC charges computer chip supplier Broadcom with illegal monopolization

A sign is posted in front of a Broadcom office on June 03, 2021 in San Jose, California.

Justin Sullivan | Getty Images

The Federal Trade Commission accused computer chip supplier Broadcom of illegally monopolizing the market for semiconductor components, the agency announced Friday.

Broadcom shares were down about 2% on the news.

The Commission voted unanimously to file charges against the company, with newly-appointed chair Lina Khan not participating in the vote. At the same time, the Commission voted to accept a proposed consent order for public comment.

The proposed agreement would prohibit Broadcom from entering some exclusivity or loyalty contracts with certain customers and require the company not to condition access to chips on exclusivity or loyalty deals. It would also prohibit Broadcom from retaliating against customers that deal with its competitors.

The FTC alleged in its complaint that Broadcom has used exclusive deals and other mechanisms to illegally monopolize markets for computer chip components, known as semiconductors, that deliver television and broadband internet.

The FTC said in a release that Broadcom is “one of the few significant suppliers of five related types of chips.” The Commission alleged Broadcom illegally maintained monopoly power through long-term agreements with at least ten original equipment manufacturers that make set top boxes and broadband devices. The agreements allegedly prevented those OEMs from buying chips from Broadcom’s rivals. The FTC alleged Broadcom made similar deals with major service providers, as well.

“By entering exclusivity and loyalty agreements with key customers at two levels of the supply chain, Broadcom created insurmountable barriers for companies trying to compete with Broadcom,” the FTC said in the release.

This story is developing. Check back for updates.

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