The Federal Trade Commission is investigating whether chipmaker Broadcom Ltd. engaged in anticompetitive tactics in negotiations with customers, the company said.
The US regulator has stepped up its investigation of the company with subpoenas that seek vast amounts of information, the Wall Street Journal reported, citing people familiar with the matter.
According to the unnamed sources, Broadcom has changed some of its contracts so that they now call for customers to buy a percentage of its output of a certain item rather than a certain number, an approach that could limit other customers’ access to the product, the newspaper said.
The investigation comes as Broadcom pursues a hostile takeover of Qualcomm in a US$103 billion deal. Since the FTC would likely review any merger for anticompetitive practices, the current probe could make regulatory approval more challenging, Reuters said.
“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 commission has no power to impose fines, but it could force changes in Broadcom’s business conduct if its investigation so warrants, the Journal said.
Broadcom, if combined with Qualcomm, would form the third-biggest chipmaker by revenue behind Intel Corp. and Samsung Electronics Co., the newspaper said.
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