Europe has escalated its crackdown on anti-competitive behavior by US tech companies, taking the rare step of ordering chipmaker Broadcom to halt certain business practices before an investigation is concluded.
Margrethe Vestager, the European Commission’s top antitrust official, said Wednesday that Broadcom must stop inserting exclusivity clauses into contracts that prevent customers from purchasing chips from rival suppliers.
Vestager said she had issued the order because she feared “irreparable” harm to competition if Broadcom was allowed to continue its behavior. The decision applies to Broadcom’s business with six TV set-top box and modem manufacturers.
The Commission, which oversees EU competition law, typically only imposes penalties against companies following exhaustive investigations that can take many years to complete.
Broadcom responded in a statement, saying it does not believe its contract provisions “have a meaningful effect on whether the customers choose to purchase Broadcom products.”
The company also said it would comply with the Commission’s order while it appeals the decision in EU courts.
The European Union has emerged as a key battleground for tech companies because of its tough rules on data protection, hate speech, taxation and competition. Apple, Amazon and Facebook have all come under scrutiny, and the Commission has in some cases levied heavy financial penalties.
The Commission only initiated its probe of Broadcom a year ago, and its decision to order the company to change its business practices in the early stages of an investigation is a new tactic. Broadcom has been told to comply with the order for a period of up to three years.
The bloc last sought to impose so-called interim measures in 2001. EU rules say the penalties can only be deployed if there’s an “urgent need” for action due to the risk of “serious and irreparable harm to competition.”
Vestager, who was recently selected for a second term as EU competition commissioner, said she would not shy away from issuing similar orders in the future.
“That doesn’t say that we now have cases lined up where interim measures will be used,” she told reporters. “But it does mean the tool is on the table.”