The European Commission has opened an investigation into whether chipmaker Broadcom abused its market position to hurt rivals in its television and modem market.

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Margrethe Vestager, the EU’s antitrust commissioner, is also set to order interim measures against the tech giant to stop its “suspected contractual restrictions”.

She warned there is a “risk of irreparable harm to the market”.



Interim measures:

We intend to order @Broadcom to halt its suspected contractual restrictions (to exclude its competitors from the market). Risk of irreparable harm to the market. @Broadcom is a big supplier of components for TV set-top boxes & modems. Now for @Broadcom to reply — Margrethe Vestager (@vestager) June 26, 2019

Broadcom, which supplies chips for TV set-top boxes, smartphones and Wi-Fi modems, has said the accusations lack merit.

The alleged practices include contracts obliging customers to buy Broadcom chips exclusively and granting rebates based on such exclusivity or minimum purchase orders.

Broadcom also exercised “abusive IP-related strategies”, the Commission said, and deliberately harmed interoperability between Broadcom products and those of rivals.

“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,” Vestager said.

“This would prevent Broadcom’s customers and, ultimately, final consumers from reaping the benefits of choice and innovation.”

Seven customers had agreed to buy systems-on-a-chip and Wi-Fi chipsets on an exclusive basis from Broadcom, the Commission said.

It warned that Broadcom’s apparent actions could marginalise or even kill off competition before the end of its official investigation, making interim measures necessary.

Broadcom said it believes the Commission’s concerns are “without merit”, but that it would continue to discuss the matter over the coming weeks.

The firm’s shares have risen 1.6 per cent to $280.84 so far today.

The Commission handed chipmaker Qualcomm a €997m fine in January 2018 for paying Apple billions of dollars to shut out rival semiconductor companies.

The payments date back to 2011 and only ended in September 2016. The tech giants’ agreement was a major factor in Apple’s decision not to source chips from Intel until September 2016.

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Qualcomm and Apple only recently settled a bitter two-year court battle in which Apple had sought $27bn (£20bn) in damages from the chipmaker.

The iPhone maker had accused Qualcomm of anti-competitive practices to monopolise the smartphone modem chips market.