Broadcom to Correct Abuse of Power on Its Own

deliberations following Apple Korea's application for a consent resolution over its alleged abuse of dominant position filed on June 4, 2019.

The Korea Fair Trade Commission accepted Broadcom’s application for a consent resolution so that the U.S. semiconductor manufacturer can correct its abuse of power against Samsung Electronics on its own. The commission decided to do so by having general meetings on Aug. 26 and 31.

Broadcom is supposed to come up with specific damage remedies, and then the commission will determine whether to accept the plan. Broadcom said in its application that it would not force Samsung Electronics to purchase components from it, not exclude competitors, raise a fund to assist small companies in the semiconductor and IT sectors, and help train semiconductor chip designers.

Previously, the commission was expected to impose a fine of at least billions of won on Broadcom instead of allowing it to come up with corrective measures. This is because Broadcom abused its relationship with Samsung Electronics in contracts adding up to trillions of won. For example, they signed a three-year component supply contract last year and Samsung Electronics must purchase US$760 million of components from Broadcom each year according to the contract. According to industry sources, Broadcom forced Samsung Electronics to sign it by threatening with its smartphone-related technical assistance.

“We made the decision because voluntary correction is a better option than punishment in the fast-developing smartphone component industry and Broadcom promised to assist in small semiconductor companies’ R&D activities,” the commission explained, adding that Samsung Electronics cannot be regarded as completely subordinate in view of its device market influence.