As the Commission explained in a Tuesday adjudicaiton, Broadcom and Samsung were in talks for a long-term supply agreement when the American chipmaker demanded the Korean giant sign or it would suspend shipments and support services.
Broadcom also wanted Samsung to commit to spending over $760 million a year, to make up the difference for any shortfalls, and not to buy from rivals.
With the market for the components it needs tight, Samsung reportedly signed. Then, when a certain viral pandemic cruelled its business, the giant conglomerate found itself having to buy parts it didn’t need. The chaebol estimates the deal cost it millions.
News of the deal eventually reached the regulator, which in 2022 asked Broadcom to propose a remedy – a common method of dispute resolution in South Korea.
Broadcom proposed a $15.5 million fund to stimulate South Korea’s small semiconductor outfits, plus extra support for Samsung.
On Tuesday, the Commission decided that’s not a reasonable restitution because it doesn’t include compensation for the impacted parties.
That’s bad news for Broadcom, because it means the regulator will now escalate matters – first by determining if the chipmaker broke local laws and then by considering a different penalty.
South Korea is protective of its local businesses – even giants like Samsung that are usually capable of fending for themselves. Broadcom reps will soon have some tricky-to-negotiate meetings on their agendas.
At least the corporation’s legal team has experience at this sort of thing. In 2018 it was probed by US authorities over contract practices, and in 2021 was forced to stop some anticompetitive practices. In 2022 it was in strife again – this time for allegedly forcing its customers to sign exclusive supply contracts.
The serial acquirer also lost a regulatory rumble over its attempted acquisition of Qualcomm, and is currently trying to explain why its proposed acquisition of VMware won’t harm competition.
Now it awaits South Korea’s wrath – and perhaps Samsung’s too.
Source: Broadcom squeezed Samsung, now South Korea’s squeezing back • The Register
Robin Edgar
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