After 18 years, the European Commission issues another “interim measures” decision in an antitrust case
Today, Margrethe Vestager, the EU commissioner for competition policy announced that the European Commission decided to impose interim measures on Broadcom, a leading supplier of chipsets used for TV set-top boxes and modems.
Broadcom is suspected by the EU’s antitrust authority of having abused the dominant position it holds on the markets for systems-on-a-chip for: (i) TV set-top boxes, (ii) fibre modems and (ii) xDSL modems by entering into agreements with six manufacturers of TV set-top boxes and modems.
According to the European Commission press-release, Broadcom’s contracts contain “clauses regarding exclusive or quasi-exclusive purchasing obligations and commercial advantages, such as rebates and other non-price related advantages (for example, early access to its technology and premium technical support) that are conditional on the customer buying these products exclusively or quasi-exclusively from Broadcom.”
The European Commission has ordered Broadcom that, within the next 30 days:
- unilaterally ceases to apply the anticompetitive provisions identified by the Commission and to inform its customers that it will no longer apply such provisions; and
- refrains from agreeing the same provisions or provisions having an equivalent object or effect in other agreements with these customers, and refrain from implementing punishing or retaliatory practices having an equivalent object or effect.
The same measures are to be observed for a period of three years after the European Commission issues a final decision on the merits of the case.
A few comments on today’s decision.
Firstly, imposing interim measures (that aim to stop immediately an anticompetitive behavior and to prevent imminent, significant and irreparable damages to competition) is a tool that has been featuring in the competition laws from Europe for a long time. However, this tool has been very rarely used by the competition authorities. For example, in case of the European Commission, the previous case of interim measures dates back from 2001 (18 years ago!), in IMS Health case.
Secondly, today’s decision may be interpreted as signaling a shift in the EU competition policy. During the last years, the Commission has focused its enforcement on imposing commitments and on applying huge fines (sometimes in the order of billions of euro) to companies that infringed the EU competition rules. However, since such measures come, as a rule, after many (sometimes even “many, many, many”) years after the infringement took place, their effectiveness and even business relevance are rightly called into question.
With its decision in the Broadcom case, the European Commission shows that it is ready to intervene at an early phase of an investigation by imposing measures that interfere, in real time, with the business decisions of a company.
This is a signal that should raise awareness in certain headquarters, especially that the interim measures are not the end but only the beginning of the competition law troubles of a company. In this context, it should be noted that the interim measures are, just as their name suggests, only rapid and temporary measures, serving as “quick fixes” for antitrust problems. Therefore, once the investigation on the merits is finalized, the interim measures may be accompanied by other measures, such as commitments or even fines imposed by the Commission, followed by private damages actions from those affected by the anticompetitive behavior etc.
Thirdly, using the interim measures may be a double-edged sword. It may expose the Commission to criticism from the business community for this form of ex-ante intervention in business decisions and even to legal actions for damages, if such interim measures decisions are invalidated by the EU courts.
The legal implications of today’s decision are significant, and since the Commission’s investigation on the merits of the case continues, Broadcom is definitely a case to follow.