South Korea launches probe into NXP, Analog Devices over alleged fair trade violations

By Kang Yoon-seung

SEJONG, July 8 (Yonhap) -- South Korea's watchdog said Wednesday it has launched a deliberation process into Dutch NXP Semiconductors N.V. and U.S.-based Analog Devices Inc. (ADI), as well as their affiliates, over alleged violations of fair trade rules.

The Fair Trade Commission (FTC) said its examiners' report showed NXP Semiconductors, a leading player in non-memory chips for the automotive sector, its Dutch affiliate NXP Semiconductors Netherlands B.V., along with its South Korean arm, allegedly violated a set of fair trade rules.

According to the FTC, NXP has prevented its distributors from engaging in business with customers already secured by competing distributors since at least 2012, effectively granting exclusive distribution rights.

NXP has also predetermined profit margins that its distributors could earn, the FTC said.

The watchdog noted ADI, a major supplier of data converters, along with digital signal processing and system products, has also fixed profit margins for distributors in advance since at least 2020, together with its Irish and South Korean arms, while setting and enforcing resale prices charged by distributors to their customers.

The FTC estimated NXP's relevant sales tied to restrictions on trading partners and interference in business management came to US$880 million and $660 million, respectively.

Those of ADI involving interference in business management and fixing resale prices each came to $800 million, it added.

The FTC can impose fines of up to 4 percent of relevant sales, meaning NXP and ADI could face penalties of up to 92 billion won ($60.7 million), and 48 billion won, respectively.

The watchdog said it plans to make a final decision after guaranteeing the companies concerned the right to defense. The examiner's report, meanwhile, does not bind the FTC's final determination.