South Korea’s antitrust regulator said on Tuesday it has decided to reject US chipmaker Broadcom Inc.’s proposal to voluntarily correct its unfair business practices with 20 billion won ($15.5 million), ruling in favour of Samsung Electronics.
Broadcom made the proposal in January as the Fair Trade Commission (FTC) has been looking into allegations the US chipmaker violated local laws by pressing Samsung to ink long-term contracts for the supply of smart device parts.
Specifically, Broadcom compelled Samsung Electronics to procure its smartphone parts worth $760 million annually from 2021 to 2023, and required the South Korean tech giant to compensate for any shortfall if the purchasing amount falls below that amount.
Under the correction scheme, Broadcom vowed to offer warranty services for three years for components purchased by Samsung from March 2020 to July 2021. The smartphones installed with such parts include the Galaxy Z Flip 3 and the Galaxy S22.
The US chipmaker added it will have the Korea Semiconductor Industry Association utilize the 20 billion-won fund to foster chip experts and support fabless companies.
“(Broadcom’s proposal) falls short as a suitable measure to restore the fair trade order and safeguard the interests of other industry players,” the FTC said in a statement.
“Expanding warranty and technology support for Samsung Electronics is deemed inadequate in terms of both content and extent as a means of damage reparation,” the regulator added, noting the South Korean victim “clearly” expressed its disagreement with the solution.
In South Korea, companies accused of anti-competitive practices can propose a correction scheme without needing to assess whether those practices violate the country’s competition act. This provision aims to expedite the resolution of cases and address issues promptly, bypassing legal proceedings.
The regulator believes that Broadcom has abused its capability to cut off shipments and technology support to Samsung.
Following the decision made on Tuesday, the FTC will initiate a review on whether Broadcom violated the country’s fair trade rules, and subsequently determine the appropriate level of punishment.
In 2021, the FTC approved Apple Korea’s proposal to fix its anti-competitive business practices and kick off programs worth 100 billion won. The move came after Apple came under fire for forcing the country’s mobile carriers to pay the cost of television advertisements and warranty service for its iPhones.
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