Broadcom Inc. (AVGO - Get Report) shares gained Wednesday even as European regulators opened an anti-trust probe into the U.S. chipmaker, accusing it of preventing rivals from competing in TV and modem chip markets
The European Commission said it opened the investigation amid concerns that Broadcom was using exclusivity practices with customers that restricted competition from rivals in the TV and modem chipset markets. The Commission also said it would impose interim measures on Broadcom during the investigation, but those provisions would not preclude the continued sale of the company's products.
"TV set-top boxes and modems are part of our daily lives, for both work and for leisure. We suspect that Broadcom, a major supplier of components for these devices, has put in place contractual restrictions to exclude its competitors from the market," said Competition Commissioner Margrethe Vestager. "This would prevent Broadcom's customers and, ultimately, final consumers from reaping the benefits of choice and innovation. We also intend to order Broadcom to halt its behaviour while our investigation proceeds, to avoid any risk of serious and irreparable harm to competition."
Broadcom said the Commission's decision will not have a material impact on its set-top box or broadband modem businesses, and said its concerns were "without merit".
"Broadcom will respond to the Commission regarding its objections and proposed interim measures," " the company said in a statement filed with the SEC and sent to TheStreet. "Broadcom will continue to cooperate with the Commission and looks forward to discussing procedural and substantive matters with the Commission over the coming weeks and months."