South Korea's top court affirms W18.6 billion fine on Broadcom
The US chipmaker was penalised for coercing Samsung Electronics into a long-term component supply deal, with the ruling finalised on October 27.
Court Upholds Antitrust Penalty
South Korea's Supreme Court has upheld an W18.6 billion ($13.9 million) antitrust fine against US chipmaker Broadcom. The ruling, finalised on October 27, concluded a lengthy legal challenge regarding Broadcom's business practices. The court dismissed an appeal from Broadcom's US headquarters and its affiliates, confirming a lower court's decision. This action leaves in place the penalty originally imposed by the Korea Fair Trade Commission (FTC).
Coercive Supply Agreement
The dispute originated in March 2020, stemming from an agreement Broadcom enforced on Samsung Electronics. Under this deal, Samsung committed to purchasing at least $760 million worth of Broadcom components annually for three years, starting in 2021. The contract covered critical radio-frequency front-end, Wi-Fi, and Bluetooth chips for smartphones.
The FTC found that Broadcom leveraged its market position by suspending purchase order approvals and threatening to halt shipments and production. This pressure forced Samsung, which had just launched its Galaxy S20 series, into an unfavourable arrangement to secure essential parts.
Regulatory Findings and Appeals
The Korea Fair Trade Commission determined in September 2023 that Broadcom had abused its superior bargaining power. It issued corrective orders alongside the W18.6 billion fine. The regulator estimated that restrictions on Samsung's ability to choose alternative suppliers cost the company at least $160 million. Samsung itself claimed total damages of $326.3 million.
Broadcom contested the FTC's findings in November 2023, but the Seoul High Court sided with the regulator in May this year, citing Broadcom's coercive tactics and efforts to block Samsung from using rival components.
This final ruling reinforces South Korea's stance against anti-competitive practices, particularly concerning dominant suppliers in critical technology sectors. For companies operating within or supplying to the Korean market, it highlights the regulatory risks associated with leveraging market power to dictate unfavourable terms.
The decision could encourage closer scrutiny of long-term supply agreements and purchasing commitments, particularly where a significant power imbalance exists between partners. Businesses should review their contracting practices to ensure compliance with local antitrust laws, particularly when dealing with major Asian manufacturers like Samsung.
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