Lee International

In 2016, the Fair Trade Commission (hereinafter, “FTC”) of Korea unveiled Qualcomm’s unfair practices and imposed corrective order, along with fines amounting to 1,211 trillion won on Qualcomm. The allegations centered on Qualcomm’s purported exploitation of its dominant market position, resulting in the hindrance of competing modern chipset manufacturers and mobile phone producers. The FTC broadly categorized Qualcomm’s unfair practices into three main facets: refusal and restriction of standard essential patent licenses, tying practices between the supply of modem chipsets and licenses, and unfair license agreement practices. Qualcomm contested the FTC’s administrative disposition and initiated administrative litigation. In 2019, the Seoul High Court ruled that the FTC’s disposition regarding unfair license agreement practices was partially unlawful; however, it upheld the FTC’s corrective orders and fines for two other facets as lawful. Both the FTC and Qualcomm appealed to the Supreme Court. However, in May 2023, the Supreme Court dismissed both appeals, thereby affirming the FTC’s imposed fines on Qualcomm. The fine imposed on Qualcomm by the FTC stands as the highest amount ever imposed in a single case.

Subsequently, in 2021, the FTC launched an investigation into Broadcom’s coercive agreement with Samsung Electronics. This agreement entailed Samsung’s commitment to purchase Broadcom’s smart device components at an annual value exceeding USD 760 million starting from 2021 for a period of three years. The terms of this agreement comprised that Samsung would compensate Broadcom for any shortfall in the actual purchase amount. In response to the FTC’s investigation, in July 2022, Broadcom submitted an application for the Consent Decree of Agreement and Resolution – a system that swiftly resolves and closes the case, irrespective of the case’s legality, where a business entity facing allegations of legal violation proposes corrective measures and damage relief measures. In August 2022, the FTC opted to initiate the consent decree procedure for Broadcom’s proposed corrective measures. However, in June 2023, the FTC assessed that Broadcom’s final consent decree proposal, which included a 20 billion won mutual cooperation fund, is inadequate to compensate for damages. Consequently, the FTC rejected this proposal and instigated a comprehensive review of the Broadcom’s violation. The FTC’s determination is expected to be made within the course of this year.

Recognizing the ongoing anti-competitive conducts among some players within the semiconductor sector, the FTC has launched an investigation into several facets, which include scrutinizing barriers that hinder the entry of new players, the exclusion of competitive operators, instances of unfair refusal of transactions, discriminatory treatment regarding pricing and conditions, and the leveraging of dominant market position to enforce coercive purchasing arrangement within the semiconductor industry. Through a comprehensive assessment of the prevailing market landscape, the FTC intends to examine factors contributing to the constriction of fair competition.