Fair Trade Commission Accepts Voluntary Correction by US Broadcom

[Asia Economy Sejong=Reporter Dongwoo Lee] The Korea Fair Trade Commission (KFTC) announced on the 7th that it has decided to accept the application for the commencement of the consent decree procedure submitted by Broadcom, a U.S. semiconductor company accused of so-called ‘gapjil’ against Samsung Electronics.

On the same day, the KFTC decided to initiate the consent decree procedure related to the abuse of superior bargaining position case involving four companies: Broadcom Incorporated, Broadcom Corporation, Avago Technologies International Sales Private Limited, and Avago Technologies Korea (Korean branch). Earlier, on July 13, these four companies applied for the commencement of the consent decree procedure concerning the ongoing investigation by the KFTC into the abuse of superior bargaining position.

The KFTC reviewed the case in which Broadcom allegedly forced Samsung Electronics to enter into a three-year Long Term Agreement (LTA) for the supply of smart device components by means such as suspending approval of purchase orders, halting shipments, and stopping technical support. The contract, effective from 2021 for three years, required Samsung to purchase more than $760 million worth of Broadcom’s smart device components annually, and if the actual purchase amount fell short, Samsung had to compensate Broadcom for the difference.

In response, Broadcom applied for the consent decree procedure, stating that rather than disputing the illegality, it would voluntarily restore competitive order in the smart device components market and promote coexistence with small and medium-sized enterprises.

According to the corrective measures submitted by Broadcom to the KFTC, the company will cease coercive acts forcing disadvantageous component supply contracts through unfair means such as shipment suspension targeting smart device manufacturers, as well as exclusionary acts against competitors. Additionally, Broadcom will establish a certain amount of a mutual growth fund to support small and medium-sized enterprises in the semiconductor and information technology (IT) industries and to foster specialized semiconductor design personnel.

Following two plenary meetings held last month for deliberation, the KFTC decided to commence the consent decree procedure.

The KFTC cited as grounds for this acceptance decision that smart device components are a sector characterized by rapid technological development and dynamic competition, making swift resolution through consent decree highly beneficial. Furthermore, the unfair practices in question occurred between parties holding leading positions in the markets for core smart device components and finished smart devices, respectively, and the consent decree is expected to effectively improve transactional order.

A KFTC official stated, "Through the consent decree, Broadcom will be encouraged to implement more proactive and concrete corrective measures, which will further promote innovative competition in the smart device components market."

This content was produced with the assistance of AI translation services.