On Feb. 9, the Korea Fair Trade Commission (KFTC) announced its decision to initiate proceedings against U.S. semiconductor giant Broadcom, following a review of the company’s application for consent resolution. Broadcom is accused of abusing its dominant market position by coercing Korean set-top box manufacturers into purchasing its products. In response, Broadcom has proactively proposed corrective measures to avoid potential sanctions.
Broadcom’s proposed measures include a commitment to refrain from entering into contracts that mandate the purchase of its products. Additionally, the company has assured that it will not impose any penalties, such as withdrawing existing contracts, should purchase requests be declined. In a significant move to support the domestic semiconductor industry, Broadcom has also proposed establishing a coexistence fund valued at 13 billion won. This fund aims to bolster the domestic fabless and system semiconductor sectors, which are crucial components of South Korea’s technology landscape.
The KFTC, South Korea’s regulatory authority tasked with maintaining fair trade practices and promoting competition, has concluded that accepting Broadcom’s proposals is preferable. This decision takes into account the nature of the case and the validity of the corrective measures offered. A KFTC official remarked, “The content is sufficient to restore competitive order in the system semiconductor market and also includes support for the growth of small and medium-sized enterprises.”
The consent resolution system, a regulatory mechanism allowing companies accused of anti-competitive practices to propose voluntary corrective measures, plays a pivotal role in this case. It enables companies like Broadcom to address regulatory concerns without admitting guilt, thus avoiding formal sanctions while still remedying affected parties and preventing future violations.
Broadcom’s influence in the global semiconductor industry is substantial, producing a wide range of semiconductor and infrastructure software solutions. This prominence explains why its business practices have come under scrutiny by regulatory bodies like the KFTC. The specific allegations against Broadcom involve its interactions with Korean set-top box manufacturers, a sector heavily reliant on semiconductor components. The KFTC’s intervention underscores the importance of maintaining competitive practices in this vital industry.
Looking ahead, the KFTC plans to consult with stakeholders and present Broadcom’s coexistence plan as an official agenda item at the full committee meeting. This development is part of a broader strategy to support small and medium-sized enterprises (SMEs) in the semiconductor industry, aligning with South Korea’s economic policies that emphasize innovation and economic diversity.
