Broadcom not to force S.Korean tech companies on deals

US chipmaker Broadcom Inc. has pledged to cease putting undue pressure on Samsung Electronics Co. and other South Korean tech companies to sign deals as it aims to avoid penalties by the Asian country’s antitrust body.

The Korea Fair Trade Commission said on Wednesday the regulator has decided to begin the process of a consent order requested by Broadcom. A consent order is a way to wrap up an anti-competition case -- even before determining whether a company under an FTC investigation has breached the law -- if the firm voluntarily proposes appropriate corrective measures.

Broadcom, a semiconductor and infrastructure software solutions provider, allegedly compelled Samsung to ink a three-year deal for components of smart devices including parts for radio frequency (RF) front end circuitry, Wi-Fi and Bluetooth. 

The contract included provisions that Samsung had to purchase Broadcom’s parts worth $760 million from January 2021 to the end of 2023 while the South Korean tech giant would make up any difference if it purchases less than that. The deal ended in August 2021 before its expiration.

The FTC judged that Broadcom allegedly abused its superior market position in this regard and sent a review report including potential punitive actions in January of this year. The regulator had planned to deliberate on Broadcom’s violation and penalties through a plenary session, but Broadcom applied to begin a consent order process on July 13.

NOT TO COMPEL UNFAIR DEALS, NOT TO EXCLUDE COMPETITORS

As part of its corrective plans, Broadcom said it will stop business practices such as forcing smart device makers to sign parts supply deals by unfair means and excluding competitors.

The US company also pledged to set up funds to support small and medium-sized enterprises in the semiconductor and information technology sectors.

The tech behemoth must prepare a tentative agreement resolution that finalizes details of the proposal such as the size of the funds within 30 days. The FTC is scheduled to collect opinions from interested parties up to 60 days following and then make a final decision. 

The regulator is set to resume the penalty process if Broadcom’s agreement resolution is rejected.

Samsung declined to comment on the FTC’s plan to begin the process of a consent order requested by Broadcom.

“It is not appropriate to make any comment on the FTC’s decision,” a Samsung official said.

Write to Ji-Hoon Lee at lizi@hankyung.com
Jongwoo Cheon edited this article.