FTC investigates Broadcom for anti-trust practices

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Chipmaker Qualcomm is fending off a takeover bid by Broadcom.
Chipmaker Qualcomm is fending off a takeover bid by Broadcom.

The US Federal Trade Commission (FTC) is investigating whether chipmaker Broadcom engaged in anti-competitive tactics in negotiations with customers, the company said yesterday.

The investigation comes as Broadcom pursues a hostile takeover of Qualcomm in a $103 billion deal. Since the FTC would likely review any merger for anti-competitive practices, the current probe could make regulatory approval more challenging.

Broadcom was recently issued subpoenas that seek an extensive amount of information, according to the Wall Street Journal.

The focus of the concern has been that Broadcom has changed some contracts to require customers to buy a percentage of its production of items rather than a certain number, the paper reported.

"This FTC review is immaterial to our business, does not relate to wireless and has no impact on our proposal to acquire Qualcomm," Broadcom said in a statement.

The FTC, which investigates actions that might break anti-trust law, declined to comment.

Chipmaker Qualcomm is fending off a takeover bid by Broadcom. In November, it rejected Broadcom's $103 billion cash-and-stock bid, saying it dramatically undervalued the company. In December, Qualcomm rejected Broadcom's 11 director nominees.

US anti-trust regulators will likely take a close look at any deal since a combined Broadcom-Qualcomm would become the dominant supplier of chips used in the 1.5 billion or so smartphones expected to be sold around the world.

It would raise the stakes for Intel, which has been diversifying from its stronghold in computers into smartphone technology by supplying modem chips to Apple.

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