FTC Halts Broadcom's Exclusivity Strategy in Certain Chip Markets

In its June 2021 complaint, the government said Broadcom is a monopolist in the sale of three types of chips used in the core circuitry that run traditional television broadcast set-top boxes, as well as DSL and fiber broadband devices. Broadcom is also one of the few significant suppliers of five related types of chips.

In its statement announcing the settlement, the FTC said, "Broadcom is prohibited 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."

Under the terms of the settlement, Broadcom must 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 final order also prohibits Broadcom from retaliating against customers for doing business with Broadcom’s competitors.

The Commission vote to approve the final order was 3-0-1. Chair Lina M. Khan did not participate.

While generally a good outcome for some competitors and consumers, the settlement does not (i) apply to most markets in which Broadcom operates; (ii) protect against most forms of anticompetitive conduct; or (iii) provide monetary relief for injured customers or rivals. Parties seeking additional protection and/or damages from Broadcom will likely have to pursue them through private litigation. Fortunately, the FTC’s findings of fact in this matter should make any related action against Broadcom simpler, cheaper, and more likely to succeed.