Summary
Broadcom Inc. (AVGO) announced on June 26, 2019, that the European Commission has opened proceedings to investigate certain contracting practices related to its set-top box and broadband modem products. The Commission has raised objections to provisions in specific customer contracts that it characterizes as "exclusivity-inducing" and intends to adopt interim measures to suspend these provisions pending the investigation's outcome. Despite this regulatory scrutiny, Broadcom maintains that it complies with European competition rules and believes the Commission's concerns are unfounded. Importantly, Broadcom states that the interim measures, if implemented, will not halt the sale of its products and that existing customer contracts will remain in force, excluding the disputed provisions. The company expects no material impact on its set-top box or broadband modem businesses. Broadcom has committed to cooperating with the Commission and will formally respond to the objections and proposed interim measures. Investors should monitor further developments in this ongoing investigation.
Key Highlights
- 1European Commission has opened proceedings against Broadcom to investigate contracting practices.
- 2The investigation concerns set-top box and broadband modem products.
- 3Commission objects to certain contract provisions deemed "exclusivity-inducing".
- 4European Commission intends to adopt interim measures to suspend disputed contract provisions.
- 5Broadcom believes its practices comply with competition rules and concerns are without merit.
- 6Company expects no material impact on set-top box or broadband modem businesses.
- 7Broadcom will cooperate with the Commission and respond to its objections.