The Federal Trade Commission has prohibited Broadcom from entering into certain types of exclusivity or loyalty agreements with its customers for the supply of key chips for traditional broadcast set top boxes and DSL and fiber broadband internet devices.
Broadcom has also been ordered to 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 order also prohibits Broadcom from retaliating against customers for doing business with Broadcom’s competitors.
- The FTC complaint, which was first announced in June 2021, alledged that between 2016 and the present, Broadcom negotiated and entered into agreements with leading OEMs, pursuant to which the OEMs agreed, for contract and renewal terms spanning multiple years, to purchase, use, or bid Broadcom Relevant Products in STBs and Broadband Devices on an exclusive or near-exclusive basis. The complaint stated that Broadcom induced OEMs to enter these agreements by communicating that OEMs that broadly committed to Broadcom would be treated as favored or “strategic” partners. Customers that did not broadly commit to Broadcom would be mere “tactical” customers, facing higher prices and less favorable non-price terms and conditions than their rivals, including disadvantageous technology access, product allocation, delivery lead times, and bid support. The complaint stated that 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.