European authorities took an even more aggressive approach than usual to regulating the technology industry Wednesday when they applied a rarely used rule, ordering a company to halt a potentially anticompetitive practice while an investigation is underway.
The European Commission’s top antitrust enforcer, Margrethe Vestager, said “interim measures” were being taken against the company, the chip maker Broadcom, to ensure that its competitors were not marginalized amid an inquiry. It is the first time the regulator has used the rule in nearly two decades, signaling urgency within Europe to keep the technology market competitive.
Broadcom, the leading maker of chips used in television set-top boxes and modems, has been accused of using exclusivity agreements to block customers from using products made by rivals. A formal inquiry of Broadcom was opened in June, and the European Commission is now ordering the company to stop enforcing the exclusionary terms with six manufacturers of the boxes and modems.
Ms. Vestager said Broadcom’s competitors would lose revenue and viability if the company’s actions were not halted, and that spurred her decision. “They will progressively be marginalized and may ultimately be forced to leave the market,” she said.
Broadcom said it would appeal the decision.
Broadcom is seen as a test case for a policy that could have significant ramifications for companies like Amazon, Apple, Facebook and Google that have been targeted in Europe over anticompetitive practices.
The European authorities have handed out billions of dollars in antitrust penalties against technology giants, but have been criticized for not acting quickly enough to match the plans of the fast-paced industry. By the time regulators have ordered the firms to change their business practices, they have cemented a dominant market position, or the technology itself has adjusted or advanced.
The announcement on Wednesday highlights the growing power of Ms. Vestager, a longtime foe of the tech industry who will begin a second five-year term in December as the European Union’s top antitrust regulator.
With many investigations taking years to complete, the decision also shows how she thinks antitrust regulation must evolve for the digital economy.
“Interim measures aim at preventing irreversible harm to competition,” Ms. Vestager said at a news conference in Brussels. She added that they “allow the commission to order a company to stop conduct that we consider at first sight to be illegal.”
Ms. Vestager said her office had weighed the company’s right to defend itself versus a need for “speed and effectiveness in antitrust enforcement.”
Over the past five years, Ms. Vestager has become the world’s best-known regulator of the technology industry. She has issued billions of dollars in fines against Google for anticompetitive practices related to the Android mobile operating system, its shopping-comparison service and online advertising. She also ordered Apple to repay roughly $14.5 billion in unpaid taxes to Ireland. The companies are appealing those judgments.
Those tough actions led to her recent reappointment as head of the European Commission’s antitrust division, and she was handed added responsibility over setting digital policy for the European Union. The widening role gives her vast authority over not just competition issues, but digital taxes and setting new rules for the use of artificial intelligence.
But even those who have applauded Ms. Vestager’s aggressiveness in the past say the actions of the antitrust office have been too slow. As investigations drag on, they say, companies can continue misbehaving, acting in ways that block competition.
“It is not unusual for competition investigations to draw out for several years,” said Agustín Reyna, head of legal and economic affairs at the European Consumer Organization, a consumer rights group. “This risks making antitrust enforcement in the fast-paced tech sector a blunt sword.”
Interim measures, Mr. Reyna said, should be used “to prevent that the abusive conduct of a company causes irreparable harm.”
Companies have resisted the use of interim measures, arguing that the move amounts to reaching a verdict in a trial that is still underway.
Broadcom said its practices and provisions were not harming competition. “We do not believe that these provisions have a meaningful effect on whether the customers choose to purchase Broadcom products,” the company said in a statement.
In July, the European Commission announced a formal inquiry into whether Amazon was unfairly using data collected from third-party sellers that use its website and logistics network. At issue is whether Amazon is using the data from those third-party customers to promote its own products and services.
The Broadcom case is being watched closely as the commission looks into other big companies in the technology sector.
The commission is exploring an investigation of Facebook, a person familiar with the inquiry has said, and rivals have accused Apple of imposing unfair terms on companies that sell services through the App Store.