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Broadcom faces EU antitrust scrutiny in dominance probe
[WASHINGTON] Broadcom is under antitrust scrutiny by the European Union for potentially using its market dominance to improperly pressure customers to buy its semiconductors and harm rivals, according to people familiar with the matter and a document obtained by Bloomberg.
The inquiry, which is preliminary, focuses on Broadcom's sales of chips in set-top box hardware used by the cable and satellite industry to provide television and internet to consumers, according to the people and a questionnaire issued by the European Commission. The people asked not to be identified because the investigation hasn't been made public.
The US Federal Trade Commission is also examining Broadcom's practices, according to one of the people.
The investigations are more evidence that Broadcom, and technology companies in general, are facing more scrutiny from regulators. Broadcom previously had its attempt to buy Qualcomm - the biggest takeover bid in the history of technology - halted by the US government. Executives have said they plan to continue growing through acquisitions.
EU officials are seeking evidence that would indicate Broadcom, based in San Jose, California, used its market position to coerce customers to stick with its chips and unfairly disadvantage competitors.
According to the questionnaire, the EU is asking if companies have ever been threatened with patent suits, whether Broadcom said it would raise prices or withdraw rebates from customers who didn't exclusively use its chips and whether it used technical compatibility as a lever to force the industry to stay with its products.
Arris International is among the Broadcom customers who received the questionnaire, according to the one of the people.
Broadcom is pushing to close its US$19 billion purchase of corporate software firm CA Technologies on Nov 5. The companies received antitrust clearance from the EU earlier this month, the last regulatory approval needed for the deal.
The new chip probe adds to previous EU investigations into Qualcomm and Intel and EU scrutiny last year of Taiwan Semiconductor Manufacturing. Intel is challenging a 2009 antitrust fine that ruled against rebates the chipmaker offered suppliers who sourced most or all of their chips from it.
In the past, the EU has investigated Samsung Electronics and Motorola Mobility for their use of legal action over patents as part of disputes with rivals.
The European Commission declined to comment on the inquiry into Broadcom. The FTC declined to comment. Broadcom also declined to comment.