Broadcom offers to scrap exclusivity deals to end EU antitrust probe

BRUSSELS (Reuters) - U.S. chipmaker Broadcom has offered to scrap its exclusivity deals with TV and modem makers to end an EU antitrust investigation and stave off a possible hefty fine.

FILE PHOTO: Broadcom Limited company logo is pictured on an office building in Rancho Bernardo, California May 12, 2016. REUTERS/Mike Blake

Broadcom, which makes chips to power smartphones, computers and networking equipment and is a major supplier to Apple, found itself in EU competition enforcers’ crosshairs over its deals with six companies to buy chips exclusively or almost exclusively from it.

That triggered an investigation in June last year and an order to stop such deals until the end of the probe on whether such practices were aimed at squeezing out rivals.

EU regulators have warned that the use of an interim order, the first in almost two decades, could happen more frequently against tech giants due to fast-moving markets.

Broadcom has now pledged not to offer incentives to TV and modem makers to encourage them to acquire more than 50% of their chips and modems from the company for their worldwide or European production.

Competition enforcers typically frown on contentious practices such as tying rebates or other benefits to exclusive or minimum-purchase requirements because these tend to thwart smaller rivals.

Broadcom said its offer addressed the Commission’s concerns and it expected the investigation to close before the end of the year.

“In these uncertain times, we welcome the opportunity to avoid protracted litigation and to resolve the investigation without recognition of liability or the imposition of a fine,” the company said in a statement.

The European Commission said it would now seek feedback before deciding whether to accept the offer which would be valid for five years and without a finding of infringement by the company.

Broadcom defended itself at a closed door hearing in August last year where participants included Intel, MediaTek, Quantenna, a unit of ON Semiconductor and Humax.

It could face a fine of up to 10% of its global turnover if found guilty of breaching EU rules.

Reporting by Foo Yun Chee; editing by Jason Neely, Louise Heavens, Kirsten Donovan