The Broadcom case: EU antitrust commitments and interim measures
Global | Video | November 2020 | 06:50
Video Details
| Caroline Thomas | Hi Richard, thank you very much for joining me today. We’re going to talk a little bit about the European Commission’s decision announced on 7 October to accept commitments from Broadcom in relation to concerns the Commission had raised about Broadcom potentially abusing a dominant position. And this was a case that only began in June 2019, so has been resolved relatively quickly in terms of abuse of dominance cases that we’ve seen in the past. So, interesting for a few reasons and I wondered if we could start with, perhaps you could explain a little bit about what the Commission’s concerns were in this case? |
| RIchard Whish QC | Sure, sure. It is very interesting to see a case of this magnitude being resolved that quickly. In terms of theory of harm and possible abuse, it seems to me to be a relatively straightforward case in that Broadcom is providing a particular type of chips, and the Commission doesn’t like the fact that there are contractual clauses that seem to tend towards exclusivity or to offer rewards for minimum purchases and also that can have a leveraging effect from type X chips to type Y chips. So fairly conventional kind of stuff actually, and the sort of stuff which, if true, certainly does seem to tick the abuse of dominance box. But, as you say, commitments accepted on 7 October. So that’s in, what, a sort of 16-month timeframe – very quick for abuse of dominance cases. |
| Caroline Thomas | And commitments are an interesting outcome for an abuse of dominance case. There are benefits to a company in terms of commitments – obviously it’s not a finding of infringement, that’s a very important aspect of a commitments decision… |
| RIchard Whish QC | And so there’s no follow‑on action for damages either. |
| Caroline Thomas |
Do you think there are – so there are clear advantages to resolving a case by commitments. Do you think there are disadvantages as well? Is this a tool that competition authorities… |
| RIchard Whish QC | Well, it’s an interesting debate and remember this commitments procedure was introduced in 2004, so it’s been with us for 16 years. And there was a period, I distinctly remember it in the noughties, I suppose, early rather than late noughties when it seemed that the majority of abuse of dominance cases ended up in commitments, especially all those energy cases. And I must say, I began to get a little bit worried about this because I do think, actually, that you need infringement decisions as an authority if you’re going to persuade people that certain conduct is unacceptable, I think you have to have infringement decisions. And there’s a danger that if everything becomes a commitments case then the deterrent effect of Article 102 is lost and also a certain amount of clarity on the law is lost. But, having said that, in the last few years there have been far more infringement decisions under Article 102 than there have ever been over a corresponding period, and so given that there is an interest now in disposing of cases quickly, and that here the law is relatively clear anyway, I can see that it’s quite a good pragmatic solution, both for Broadcom, but also for DG COMP. |
| Caroline Thomas |
And another notable feature of this case was it’s the first time that the Commission has used interim measures in a case for quite some considerable time. And do you think that’s influenced the speed of resolution of the case and is that something that we might see more of going forwards? |
| RIchard Whish QC | Well, I don’t think there can be much doubt about that. The last interim measures decision was 2001 and that case went to the General Court and then that became a kind of a saga in itself because IMS Health was asking for interim measures against the interim measures and it just became very complicated and for many years after that the Commission’s attitude seemed to be: this prevents us getting on with the substance of the case, and so the tool fell into disuse. In more recent times, lots of people have asked for speedier decision-making, especially in certain kinds of markets where there’s a danger of tipping and so on. So I can see why the Commission decided to, as it were, take this measure down off the top of the wardrobe and dust it off to see if it still works or not. Whether it could be adapted to other kinds of markets which are more complex – I mean, this seems to be a relatively simply case. If you’ve got a contractual clause that is tending towards exclusivity, then the interim measure is quite simple: don’t enforce the clause until we decide the case. Rather different from saying to Google, we don’t like your search engine, here’s an interim measure to change the design of your search engine. I mean, it’s not a very easy thing to achieve. But I suspect we will see more use of interim measures and PaRR published something, I think it was 28 April, looking around the ECN, year by year for the last five years, and demonstrating that in 2019 there was an enormous uptick in interim measures decisions – far more than there’d ever been around the whole of the EU in any year before. And, in particular, I’ve been noticing that Italy, France and Belgium seem to use interim measures quite frequently nowadays. |
| Caroline Thomas | How interesting. So a trend to watch out for? |
| RIchard Whish QC | I think so, I do think so. |
| Caroline Thomas | And a trend that might be influenced – Broadcom appealed against the interim measures in this case and that appeal remains outstanding on the Court’s website as far as we can see... |
| RIchard Whish QC | Well, I’ve looked into this and we’ve got the commitments decision, but there’s nothing in the press release announcing the commitments to suggest that that appeal has been dropped, and if you type in the case number in the Court of Justice’s web search page, that case is still there. Very interesting. I mean, I think for many of us to have a judgment on interim measures in 2020‑21 would be very useful. On the other hand, do the interim measures in that case have any meaning now that the commitments have been offered? Watch this space. |
| Caroline Thomas | Thank you very much, Richard. |
| RIchard Whish QC | Pleasure. |
Head of Antitrust and Competition, London; Partner
Email
caroline.thomas@nortonrosefulbright.com