On October 7, 2020 the Commission accepted commitments offered by Broadcom to address concerns relating to the sale of chipsets used in TV set-top boxes (“STBs”) and in internet modems. This marks the end of a case that unusually combined the use of interim measures and the commitments procedure. The Commission may view this case as a blueprint to achieving expedited resolutions of antitrust investigations in technology markets and beyond.
An investigation concluded in a record-breaking 16 months—at least from the opening of the investigation
In June 2019, the Commission opened an investigation against Broadcom under Article 102 TFEU. The Commission has done so acting on informal complaints and market information received in the course of 2018. The investigation scrutinized, in particular, terms in a few, specific Broadcom contracts that allegedly involved both the bundling of certain Broadcom products, and putative exclusivity mechanisms. The Commission also announced it was investigating “IP-related strategies,” and whether Broadcom was making technological choices that degraded interoperability of certain chipsets. The complexity of the Commission’s concerns suggested complex and drawn-out proceedings.
A few months later, in October 2019, the Commission imposed interim measures—a step it had not taken since 2001. The interim measures ordered Broadcom to cease applying terms that the Commission characterized as exclusive or exclusive-like or to constitute bundling in its contracts with six specific OEMs for a period of three years. Broadcom complied with these measures but filed an action for their annulment to the General Court on December 23, 2019. The interim measures did not cover the interoperability and IP-related concerns.
In parallel, and with the interim measures already in force, Broadcom entered into negotiations with the Commission where it committed, under Article 9 of Regulation No. 1/2003, to refrain from three of the practices the Commission had been investigating: (i) exclusivity practices; (ii) exclusivity- inducing rebates or other advantages; and (iii) bundling practices. The commitments will apply for seven years, subject to a standard review clause.
The scope of these commitments extends beyond that of the interim measures in two ways. First, the commitments extend to all of Broadcom’s current and potential customers, not just the six OEMs identified in the interim measures. Second, the commitments contain additional provisions apparently designed for anti-circumvention. More specifically:
- At the EEA level, Broadcom will not:
- Require or induce by means of price or non-price advantages an OEM to obtain any minimum percentage of its EEA requirements for SoCs for STBs, xDSL modems and fibre modems from Broadcom; and
- Condition the supply of, or the granting of advantages, for SoCs for STBs, xDSL modems and fibre modems on an OEM obtaining from Broadcom another of these products or any other product within the scope of the commitments.
- At the worldwide level (excluding China), Broadcom will not:
- Require or induce by means of price or non-price advantages an OEM to obtain more than 50% of its requirements for SoCs for STBs, xDSL modems and fibre modems from Broadcom; and
- Condition the supply of, or the granting of advantages for, SoCs for STBs, xDSL modems and fibre modems on an OEM obtaining from Broadcom more than 50% of its requirements for any other of these products, or for other products within the scope of the commitments.
To address other ways through which Broadcom could potentially achieve exclusivity-like outcomes, the commitments also include “specific provisions regarding incentives to bid equipment based on Broadcom products as well as certain additional clauses with regard to service providers in the EEA.”
The commitments do not seem to address the initial concerns the Commission had about the alleged abusive use of IP rights by Broadcom, suggesting the Commission abandoned its concerns in this area. The commitments also do not contain a specific undertaking addressing the initial interoperability concerns. Rather, as a means of tackling potential circumvention of the other provisions, the commitments prevent Broadcom from changing standard-based interfaces in such a manner that would degrade interoperability between its products and third- party products.
The Commission’s acceptance of Broadcom’s commitments package ends its investigation, which lasted less than 16 months—a considerably shorter formal investigation than that in other recent abuse of dominance cases in the technology markets.
A new framework for swift resolutions in technology cases?
As explained in our June 2019 European Competition Law Newsletter, aspects of the Broadcom investigation may have made it appear as a good “test case” for the Commission to resuscitate the use of interim measures. In recent years, the Commission had been reluctant to make use of interim measures, in particular due to the high standard required to impose them. Under Article 8 of Regulation No. 1/2003, interim measures can only be mandated when the Commission is able to demonstrate a “prima facie finding of infringement” and “in cases of urgency due to the risk of serious and irreparable damage to competition.”
Because, at least under the facts the Commission had alleged, Broadcom concerned well-established theories of harm of exclusivity or tying and bundling, the Commission likely viewed its chances of prevailing on the “prima facie finding” element as high. In its October 2019 decision, the Commission claimed the urgency requirement was also satisfied due to the bidding nature of the market, the prevalence of long-term contracts, and evidence of harm to Broadcom’s competitors suggesting potential “exit of the few remaining competitors.”
The use of both interim measures and commitments together makes this case particularly novel. When announcing the Broadcom commitments, Commissioner Vestager noted that the imposition of interim measures had allowed “for commitments discussions to take place in a more efficient manner and without the risk of the market deteriorating in the meantime.” The Broadcom case demonstrates how the combined use of interim measures and commitment decisions can enable the Commission to reach resolutions of antitrust investigations more quickly by relying on instruments it already has in its enforcement toolbox.
But speed comes at a cost. The commitments resolution could raise two questions as to its appropriateness:
- The commitments decision implies that the General Court will likely no longer have the opportunity to test the Commission’s reasoning in applying interim measures. The Court’s assessment would have clarified whether the urgency standard was met.
Broadcom had argued that the Commission based its urgency assessment only on “a series of generic claims” and that it could not identify the time period in which the harm was expected to materialize. The resolution through the Article 9 commitments, however, means we will have to wait for the confirmation of Commission’s approach in a future case.
- It is difficult to square the combined use of interim measures and commitments with the policy goals of the two instruments. Interim measures require a demonstration of prima facie infringement, making them particularly suitable for well-established theories of harm in clear-cut cases. But in these types of cases, the Commission would typically seek to issue fines and findings of infringement that facilitate third-party litigants’ ability to bring actions for damages against the infringing company. Resolving the case through Article 9 commitments means that neither of these things will happen. It will be interesting to see how the Commission strikes this balance in future cases.
 Broadcom (Case COMP/AT.40608), Commission decision of October 7, 2020 (decision not yet available).
 Respectively, under Article 8 (interim measures) and Article 9 (commitments) of the Council Regulation (EC) No. 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles 81 and 82 TFEU.
 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 (discussed in our June 2019 European Competition Law Newsletter).
 Broadcom v. Commission (Case T-876/19), case pending.
 SoCs for cable modems, Front End Chips for STBs and modems and/or Wi-Fi Chips for STBs and modems).
 Initial concerns related to potentially “abusive IP-related strategies” were mentioned in the 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. Neither the interim measures decision, nor the commitments seem to address this concern, which suggests the concern was dropped by the Commission during its investigation.
 Broadcom (Case COMP/AT.40608), Commission decision of October 16, 2019.
 Commission Statement 20/1853, “Statement by Executive Vice-President Margrethe Vestager on the Commission decision to accept commitments by Broadcom to ensure competition in chipset markets for modems and set-top boxes.” October 7, 2020.