Strange Bedfellows
Samsung Electronics and Qualcomm will become one team in an antitrust dispute trial against U.S.-based semiconductor company Broadcom. The two have agreed to do so as they have suffered from long-term exclusivity agreements that Broadcom demanded they sign. Qualcomm, which was fined 1 trillion won (US$755 million) for overcharging Samsung Electronics for patent use, will support Samsung Electronics this time.
According to the Korea Fair Trade Commission (KFTC) and industry sources on May 9, a representative of Qualcomm will attend a KFTC plenary session on Broadcom in June. “Qualcomm has expressed its intention to stand as a witness for Samsung Electronics,” a KFTC official said.
Broadcom was put under an investigation by the KFTC for allegedly forcing Samsung Electronics to sign long-term contracts on buying components for smartphones from Broadcom for three years. Last year, as the investigation was near its end, Broadcom submitted a consent resolution plan to provide 20 billion won (US$15 million) as a win-win fund to companies that suffered damages due to Broadcom. The KFTC plenary session will determine whether the organization will finally accept or reject Broadcom’s proposal. If the consent resolution is finally accepted, the case will be closed and Broadcom will avoid legal penalties.
Samsung Electronics is opposing the consent resolution, arguing that Broadcom’s proposed 20-billion-won win-win fund falls far short of the actual damages it caused. It demands that Broadcom promise to compensate for huge damage, or substantial sanctions such as fines be imposed on Broadcom.
Qualcomm, a U.S. chipmaker, will participate in the KFTC’s plenary session next month to lend its support to Samsung Electronics. Yesterday's enemy becomes today's friend. It was Qualcomm, not Samsung, that reported Broadcom’s abuse of power to the KFTC in the first place. Although Qualcomm asserted that Broadcom’s enforcement of a long-term contract with Samsung prevented Qualcomm from selling its products to Samsung, Qualcomm also had a reason to seek a war of revenge against Broadcom. Broadcom had previously reported Qualcomm to the KFTC over rebates. In 2009, Qualcomm was fined more than 200 billion won (US$151 million). Their hate-hate relationship did not stop there. In 2017, Broadcom attempted to acquire Qualcomm but failed due to opposition from U.S. authorities.
The relationship has been extraordinary lately between Qualcomm and Samsung, so they decided to get into bed together this time. Qualcomm was accused of using its patent rights to collect excessive fees while selling components to Samsung. In 2017, the KFTC caught Qualcomm on that charge and fined Qualcomm 1 trillion won (US$755 million). It was the largest-ever fine levied on a single company in the history of Korea. Qualcomm sued, claiming the penalty was unfair, but after more than six years of legal battles, the Supreme Court upheld the fine in April.
“We will examine whether the consent resolution filed by Broadcom will be able to remedy damage faster than litigation,” a KFTC official said with reference to the plenary session to be held in June.