U.S. Broadcom fines 18.6 billion won for 'abuse of power by Samsung Electronics', Supreme Court confirms

(Seoul = Yonhap News) Reporter Lee Mi-ryeong = Broadcom, an American semiconductor company, filed a lawsuit seeking cancellation of a fine of approximately 18.6 billion won imposed by the Fair Trade Commission on suspicion of abuse of power against Samsung Electronics, but ultimately lost.

According to the legal community on the 2nd, the first division of the Supreme Court (Chief Justice Dae-yeop Cheon) confirmed the original trial's ruling on the 27th of last month in a lawsuit to cancel the correction order and fine payment order filed by Broadcom's U.S. headquarters and branches against the Fair Trade Commission.

In September 2023, the Fair Trade Commission imposed a corrective order and a fine of approximately 18.6 billion won on Broadcom, claiming that it violated the Fair Trade Act by abusing its trading position.

The Fair Trade Commission found that Broadcom pressured Samsung Electronics by stopping the supply of smartphone components and forced a long-term contract (LTA) that was unilaterally advantageous to the company.

In March 2020, Samsung Electronics signed a contract to purchase Broadcom's RFFE (components that improve communication frequency quality) and Wi-Fi and Bluetooth-related components for more than $760 million annually for three years from 2021, and to compensate Broadcom for the difference if the purchase amount falls short.

The Fair Trade Commission determined that in the process of concluding this contract, Broadcom unilaterally forced an unfavorable contract on Samsung by using unfair means, such as suspending purchase order approval and suspending product shipment and production.

At the time, Broadcom was the world's No. 1 operator with an overwhelming share in the RFFE market, and Samsung Electronics had no choice but to listen to Broadcom's unilateral demands to prevent production disruptions for products such as the Galaxy S20 that had just been released.

The Fair Trade Commission estimated that the additional costs paid by Samsung Electronics due to restrictions on component selection amounted to at least $160 million (approximately KRW 213.7 billion based on the exchange rate at the time). Samsung Electronics claimed that it suffered damages worth a total of $326.3 million (about 437.5 billion won).

Broadcom disobeyed the Fair Trade Commission's decision and filed a lawsuit in November 2023.

However, in May of this year, the Seoul High Court ruled that the plaintiff lost, saying that the Fair Trade Commission's fine was justified.

The Seoul High Court acknowledged that Broadcom forced the conclusion of a long-term contract through the highly unusual means of arbitrarily stopping the supply of components, and that it clearly recognized that the contract was concluded against the will of the other party.

In addition, it was determined that the contents of the long-term contract were unilaterally disadvantageous to Samsung Electronics and did not comply with normal trading practices, and that Broadcom acted in this way to prevent it from adopting parts from its competitors.

Broadcom appealed this ruling, but the Supreme Court dismissed the appeal.

The Fair Trade Commission's decision has the same effect as the first trial ruling, so if the parties object, it will be confirmed through the Seoul High Court and Supreme Court rulings.