FTC imposes provisions on Broadcom's $5.9bn Brocade acquisition
04 July 2017 | James Pearce
Broadcom, a manufacturer of semiconductors, has struck an agreement with the Federal Trade Commission to implement restrictions on its proposed acquisition of Brocade Communications Systems.
The restrictions will see Broadcom establish a firewall that will limit Brocade’s ability to access the commercially sensitive data of rival Cisco Systems. Cisco is a customer of Broadcom.
Brocade and Cisco are currently the only two global competitors in the fibre channel switch market, with Broadcom supplying application specific integrated circuits, or ASICs, to both.
The FTC said it was concerned Broadcom, as the new owner of Brocade, could potentially use its own access to Cisco’s sensitive data to unilaterally exercise market power, or coordinate action among Brocade and Cisco, bumping up prices for customers.
The proposed consent order, prevents Broadcom from using Cisco’s competitively sensitive confidential information for any purpose other than the design, manufacturing and sale of fibre channel ASICs for Cisco. The FTC said it will appoint a monitor for five years to ensure compliance.
“The proposed consent order, prevents Broadcom from using Cisco’s competitively sensitive confidential information for any purpose other than the design, manufacturing and sale of fibre channel ASICs for Cisco.
“It requires Broadcom’s business group responsible for developing, producing, selling and marketing fibre channel ASICs for Cisco to have separate facilities and a separate information technology system with security protocols that allow access only to authorised individuals, and provides for other information firewall protections.”
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