South Korea’s Fair Trade Commission has announced a provisional fine of 19.1 billion won ($14.24 million) on U.S. chipmaker Broadcom for compelling Samsung Electronics into a long-term supply agreement that was deemed one-sided.
The punitive action comes after Broadcom leveraged its market dominance and employed unfair tactics, including disrupting supply and technical support, to coerce Samsung into signing a long-term contract in 2020, according to the Fair Trade Commission.
Samsung Electronics, facing supply disruptions due to Broadcom’s actions, entered into the agreement in 2020. The deal obligated Samsung to purchase Broadcom smartphone components worth $760 million annually from 2021 to 2023, according to media reports.
Additionally, Samsung was compelled to compensate for any shortfall if the purchasing amount fell below the specified figure. The agreement concluded in August 2021. Korea-based Samsung is the leading smartphone supplier in the world.
The Fair Trade Commission noted that Broadcom’s significant market share in cutting-edge mobile device components enabled the company to use unfair tactics in forcing Samsung into the agreement. In June, the regulator rejected Broadcom’s proposal to voluntarily correct its unfair business practices, favoring Samsung’s stance.
The corrective order and fine underscore South Korea’s commitment to upholding fair trade practices and safeguarding the interests of industry players impacted by unfair business conduct.
“Broadcom is disappointed with the decision announced by the Korea Fair Trade Commission (KFTC) today and intends to appeal the decision to the Seoul High Court. For decades, Broadcom has been working closely with Korean customers in a fair and lawful manner and has made significant contributions to the innovation and success of the Korean economy and some of its largest technology organizations,” Broadcom said in a statement.
“In this matter, Broadcom worked very closely with the staff of the KFTC to reach a mutually beneficial outcome that is fair and reasonable for all parties involved and unfortunately, as a result of the unprecedented intervention of some third parties, the joint recommendation of Broadcom and the KFTC staff was not adopted by the Commission itself. Despite this, Broadcom will continue to support our customers in Korea and work with them to deliver the market leading products for which we are known,” Broadcom said.
