FTC Says Broadcom to Create Firewall to Address Concerns About Planned Buy of Brocade
The FTC said Broadcom agreed to create a firewall to remedy agency concerns that the company's proposed $5.9 billion buy of Brocade Communications Systems, a networking products maker, would otherwise be anti-competitive. The concerns arose "because of Broadcom’s current access…
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to the confidential business information of Brocade’s major competitor, Cisco Systems, Inc., that could be used to restrain competition or slow innovation in the worldwide market for fibre channel switches," said an FTC release Monday. It said Brocade and Cisco are the only two competitors in the global market for fiber channel switches, and Broadcom supplies both companies with application specific integrated circuits to make them. Such switches are part of networks that transfer data between servers and storage arrays in data centers, the release said. By owning Brocade, Broadcom could use Cisco's competitively sensitive confidential information "to unilaterally exercise market power or to coordinate action among Brocade and Cisco, increasing the likelihood that customers would pay higher prices for fibre channel switches, or that innovation would be lessened," said the FTC. Commissioners voted 2-0 to issue a complaint and accept the proposed consent decree subject to public comment through Aug. 2, and final action thereafter.