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FTC settles charges Broadcom's acquisition of Brocade would cause anti-competitive effects

By Mark Iandolo | Jul 12, 2017

WASHINGTON (Legal Newsline) — The Federal Trade Commission (FTC) announced July 3 that semiconductor manufacturer Broadcom Limited will establish a firewall to remedy FTC concerns related to its $5.9 billion acquisition of Brocade Communications Systems Inc. The FTC had alleged the acquisition would likely be anti-competitive.

The FTC voiced its concerns because of Broadcom’s current access to the confidential business information of Brocade’s major competitor, Cisco Systems Inc. 

According to the FTC, Broadcom could use this information to restrain competition or slow innovation for fibre channel switches in the global market. Fibre channel switches, which help transfer data between servers and storage arrays in data centers quickly, are only produced by Brocade and Cisco. Broadcom is Cisco’s supplier for fibre channel switches and has extensive access to Cisco’s competitively sensitive confidential information.

To settle the allegations, Broadcom agreed to not use Cisco’s competitively sensitive confidential information for any purpose other than designing, manufacturing and selling fibre channel ASICs for Cisco. An FTC-appointed monitor will assure compliance for a five-year period.

The FTC voted 2-0 to issue the complaint and accept the proposed consent order.

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U.S. Federal Trade Commission