South Korean and U.S. Governments Hold Talks on Penalty Imposed on Qualcomm

The U.S. and South Korean governments had their first bilateral trade talks since the implementation of the KORUS FTA seven years ago with regard to the Korea Fair Trade Commission’s penalty imposition on Qualcomm. The U.S. government demanded stronger defense for American companies subject to the commission’s investigations.

The Ministry of Trade, Industry and Energy of South Korea announced that the meeting regarding competition issues was held in Seoul on July 9. Kim Seung-ho, head of the New Trade Strategy Office of the ministry, and Assistant U.S. Trade Representative Michael Beeman led the meeting. Earlier, the Office of the U.S. Trade Representative made a request for the meeting in March this year. The Office of the U.S. Trade Representative has raised several objections so far with regard to the commission’s investigations. However, this is the first time that it made a request for bilateral trade talks.
 

In December 2016, the commission imposed a penalty of 1.03 trillion won and issued a corrective order, claiming that Qualcomm hindered competition and monopolized patent rights by abusing its dominant market position. In response, Qualcomm filed a lawsuit in South Korea, claiming that no adequate defense rights were ensured during its investigation. The office made the same assertion in making the request, saying that the commission violated Clause 3, Article 16-1 of the KORUS FTA. According to the clause, an investigated party must be given a chance to present defensive evidence and speak during an administrative hearing convened to determine whether a fair competition law has been violated.
 

“We explained to the United States that provisions and procedures based on South Korea’s competition laws are in agreement with the KORUS FTA,” the ministry said, adding, “The issue will have to be handled through more negotiations.”