The South Korean antitrust regulator has slapped a KRW 19.1 billion (around $14.3 million) fine on Broadcom, the famous US-based multinational chip company. According to a Korea Times report, after a four-year investigation, the South Korean regulator found that Broadcom has been following unfair business practices against Samsung Electronics.
Broadcom used its market-dominant position and unlawful tactics to force Samsung to sign a long-term deal for smartphone parts. Samsung had to sign this disadvantageous long-term agreement in 2020 after Broadcom cut off the supply of its products and technical support to the South Korean tech giant. Hence, Samsung faced supply disruptions, which negatively impacted the company's smartphone business.
Broadcom's unfair deal with Samsung was aimed at stopping the latter from cheaper parts from other brands
Under this agreement, Broadcom was found to compel Samsung Electronics to procure smartphone parts worth $760 million annually from 2021 to 2023. It also required Samsung to pay Broadcom for any shortfall if the purchasing amount fell below $760 million. The deal aimed to stop Samsung from buying cheaper parts from Qorvo and Qualcomm. This deal ended in August 2021, though. The KFTC (Korean Federal Trade Commission) rejected Broadcom's proposal to voluntarily correct its unfair business practices, ruling in favor of Samsung Electronics.
The KFTC said, “Broadcom is a company which holds an overwhelming market share in the market for cutting-edge and high-performance mobile device parts that are used in smartphones and tablet PCs. (The company) used unfair tactics, including suspending order approvals, shipments, and technical support, to force Samsung Electronics to sign a long-term agreement.”