Korea's top court upholds W18.6b fine on Broadcom for pressuring Samsung into unfair deal

South Korea's Supreme Court has upheld an 18.6 billion won ($13.9 million) antitrust fine against US chipmaker Broadcom for abusing its bargaining power to force Samsung Electronics into an unfavorable long-term component supply agreement.

The court dismissed an appeal filed by Broadcom's US headquarters and affiliated companies on Oct. 27, finalizing a lower court ruling that upheld the penalty imposed by the Korea Fair Trade Commission, legal sources said Monday.

The dispute dates to March 2020, when Samsung agreed to purchase at least $760 million worth of Broadcom components annually for three years starting in 2021. Under the agreement, Samsung was required to compensate Broadcom for any shortfall in purchases.

The contract covered radio-frequency front-end components, which manage wireless signals in smartphones, as well as Wi-Fi and Bluetooth chips.

According to the FTC, Broadcom pressured Samsung into signing the agreement by suspending purchase order approvals and threatening to halt component shipments and production.

Samsung, which had recently launched its Galaxy S20 smartphone series, faced potential production disruptions if it failed to secure the parts.

The regulator estimated that restrictions on Samsung's ability to choose competing components cost the company at least $160 million. Samsung claimed total damages of $326.3 million.

In September 2023, the FTC found Broadcom had abused its superior bargaining position and imposed corrective orders and the fine. Broadcom challenged the decision in court that November.

The Seoul High Court ruled against Broadcom in May this year, finding that the company had used unusually coercive measures to secure a contract it knew was unfavorable to Samsung.

The court also found that Broadcom had sought to prevent Samsung from adopting rival suppliers' components.

Broadcom appealed, but the Supreme Court's dismissal leaves the FTC's sanctions in place.