On June 26, 2019, the Commission opened a formal investigation into whether Broadcom’s contractual requirements, IP practices, and technological developments relating to TV and modem chipsets infringed Article 102 TFEU. Simultaneously, the Commission issued a statement of objections seeking to impose interim measures against Broadcom’s alleged abusive exclusivity clauses. This is the first time in 18 years that the Commission makes use of this legal instrument.[1]

The Commission’s investigation focuses on five alleged practices relating to the manufacturing and sale of TV and modem chipsets: (i) exclusive purchasing obligations; (ii) rebates or other advantages conditioned on exclusivity or minimum purchase requirements; (iii) product bundling; (iv) abusive IP-related strategies; and (v) deliberate degradation of interoperability between Broadcom’s products and other products.

The Commission also announced that it had sent Broadcom a statement of objections seeking to impose interim measures regarding two of the practices under investigation: Broadcom’s alleged use of exclusive purchasing obligations and grant of rebates conditioned on exclusivity or minimum purchases.

The U.S. Federal Trade Commission has also opened an investigation into Broadcom over similar concerns.[2]

The “hunt” for an interim measures case

The last time the Commission imposed interim measures was in IMS Health[3] in 2001. This case resulted in the interim measures being overturned by the Court of Justice. The Court suspended the Commission’s interim measures due to: (i) doubts over the correctness of the Commission’s legal assessment that could only be resolved in the judgment on the merits; and (ii) no risk of serious and irreparable harm to IMS Health. While Article 8 of Regulation 1/2003 later introduced a statutory basis for the Commission to impose interim measures, it has never been used to-date.

The Commission’s previous lack of appetite to bring a case mandating interim measures is due in part to the high standard required to impose them. Under Article 8, the Commission may only impose interim measures “in cases of urgency due to the risk of serious and irreparable damage to competition,” and it must also be able to demonstrate a “prima facie finding of infringement.” Commissioner Vestager herself described these criteria as a “very high bar.”[4]

There are several reasons why the Commission may consider Broadcom an appropriate case for interim measures. First, the investigation concerns exclusivity obligations—one of the most established theories of harm in EU competition law dating back to Hoffman La Roche in the late 1970s.[5] This should help the Commission meet both limbs of the test. A well-established theory will make it easier to show a prima facie case. It should also make it easier to claim a risk of serious and irreparable damage to competition because exclusivity-based conduct inherently creates, as the name suggests, a risk of exclusion. Second, the Commission reportedly has evidence of several of Broadcom’s rivals teetering on the brink of exiting the market.[6] Third, procurement in this space often involves tenders, which means that the Commission may consider damage to competition more likely and new entry more difficult. Similarly, the Commission may argue that economies of scale in the segments under investigation may exacerbate any potential effects.[7]

What’s next

Following the statement of objections, Broadcom can respond within two weeks. This period can be extended to account for Broadcom’s procedural rights, such as the right to access the file. Should the Commission then issue a decision imposing interim measures, Broadcom could appeal to the General Court. An appeal would not in itself have suspensory effect on the interim measures imposed.

Broadcom could, however, also apply to the Court for interim relief from the Commission’s interim measures, as IMS did in 2001.[8] Interim relief is not often granted by the European Courts. There are few instances of successful actions in antitrust cases.[9] If obtained here, the Court order would suspend application of the Commission’s interim measures during the appeal against them. While the Court expedites hearings on interim measures, it would still delay application of the measures mandated by the Commission by several months.

The outcome of this case, which is unlikely to be concluded under Commissioner Vestager, could dictate the Commission’s approach to interim measures for years to come. Success may revitalize the Commission’s use of the tool. A repeat of the IMS experience may conversely see interim measures fall out of the enforcer’s toolbox for another twenty years.

[1]      Commission Press Release IP/19/3410, “Antitrust: Commission opens investigation into Broadcom and sends Statement of Objections seeking to impose interim measures in TV and modem chipsets markets.” June 26, 2019.

[2]      Reuters, FTC Investigating Broadcom for Antitrust Practices, January 17, 2018, available at: https://www.reuters.com/article/us-broadcom-ftc-idUSKBN1F62H8.

[3]      NDC Health/IMS Health: Interim measures (Case COMP D3/38.044), Commission decision of July 3, 2001.

[4]      Financial Times, EU considers tougher competition powers, July 2, 2017, available at: https://www.ft.com/content/7068be02- 5f19-11e7-91a7- 502f7ee26895.

[5]      Hoffman-La Roche v. Commission (Case 85/76), EU:C:1979:36.

[6]      MLex, Comment: Broadcom’s modem terms are testing ground for EU ‘interim measures’ renaissance, June 26, 2019, available at: http://www.mlex.com/ GlobalAntitrust/DetailView.aspx?cid=1106884&siteid=190&rdir=1.

[7]      Ibid.

[8]      See IMS Health v. Commission (Case T-184/01 R), EU:T:2001:259; NDC Health v. IMS (Case C-481/01 P(R)), EU:C:2002:223.

[9]      Apart from IMS Health cited above, the claimants managed to successfully obtain interim relief from the Courts in, for example, Van den Bergh Foods Ltd. v. Commission (Case T-65/98 R), EU:T:1998:155 and Bayer AG v. Commission (Case T-41/96 R), EU:T:1996:68.