The decision recently adopted by the Commission imposing interim measures on Broadcom, the world's leading supplier of chipsets used for TV set-top boxes and modems, has drawn attention. Although the relevance of interim measures is unquestionable, especially in rapidly-evolving markets, such measures have rarely been used by the Commission in recent years.
The last time the Commission made use of interim measures was in 2001 (decision 2002/165/EC), in a case relating to a prima facie abuse by IMS Health of its dominant position following its refusal to grant licensing access to a methodology it had developed. This decision was suspended by the General Court and later withdrawn by the Commission.
In its decision of 16 October (not yet published), the Commission considers that the conditions required by Article 8 of Regulation 1/2003 to impose interim measures have been fulfilled in relation to certain restrictions imposed by Broadcom on its customers.
With regard to the first condition – so the requirement of a prima facie finding of an infringement of competition law – the Commission considers that Broadcom prima facie holds a dominant position in the markets for its “systems-on-a-chip” for TV set-top boxes, fibre modems and xDSL modems (the “brain” of those products).
Furthermore, the Commission finds that the quasi-exclusivity requirements Broadcom imposes on six of its customers constitute, at first sight, an abuse of dominant position that threatens to cause serious and irreparable damage to competition in those markets.
In particular, the Commission opines on a prima facie basis that Broadcom abuses its dominant position by providing advantages (rebates and other non-price advantages such as first access to its technology and premium technical support) to its main customers on condition that they buy their systems-on-a-chip for TV set-top boxes, fibre modems and xDSL modems either exclusively or quasi-exclusively from Broadcom. In addition, Broadcom prima facie leverages its dominant position in those markets to strengthen its position in the market for systems-on-a-chip for cable modems.
With regard to the second condition – so the requirement of the existence of urgency due to the risk of serious and irreparable damage to competition - the Commission considers that it is fulfilled as Broadcom’s conduct prevents effective competition and has negative effects on its competitors. According to the Commission, interim measures are all the more justified in view of the fact that significant tenders are to be launched in those markets in the near future. A decision on the merits will likely arrive too late to prevent competitors from being marginalised in these markets.
Consequently, the Commission is ordering Broadcom to stop applying the anti-competitive provisions and to refrain from establishing provisions having an equivalent object or effect. These measures will apply for a period of 3 years or until the Commission completes its investigation regarding the conduct. Broadcom has announced its intention to challenge the decision before the European courts.
In her statement regarding the case, Commissioner Vestager confirmed the Commission’s willingness to make further use of interim measures, while also committing to respect the rights of defence of the companies involved. She confirmed that “interim measures are one way to tackle the challenge of enforcing our competition rules in a fast and effective manner. And this is why they are so important. Especially in fast-moving markets. Whenever necessary, I am therefore committed to making the best possible use of this important tool”.
The use of such measures by the Commission in other markets is therefore to be closely monitored. The Court of Justice’s views on the Commission’s interpretation of the requirements of article 8 of Regulation 1/2003 will also prove highly relevant for the future application of interim measures.
For further information about this case and/or for general legal advice relating to competition law issues, please contact Pierre de Bandt.