KFTC Initiates Consent Decision Process for Broadcom's Application(2025.2.9)

• Broadcom to cease requiring domestic set-top box manufacturers to use only its system semiconductor components.
• Promoting coexistence with the domestic semiconductor industry, including support for infrastructure for system semiconductor startups (worth approximately KRW 13 billion).

The Korea Fair Trade Commission (Chairman: Han Ki-jeong, hereinafter "KFTC") has decided to initiate the consent decision process on January 22, 2025, in response to Broadcom's application regarding allegations of violations of the Monopoly Regulation and Fair Trade Act (hereinafter "Fair Trade Act").

 

(Broadcom: ▴Broadcom Inc., ▴Broadcom Corporation (both U.S.), ▴Avago Technologies International Sales Pte. Limited (Singapore), ▴Avago Technologies Korea Ltd. (South Korea))

 

The consent decision is a system in which a business under investigation for possible legal violations voluntarily proposes corrective measures, such as remedying harm and improving transaction practices. If the KFTC deems these measures appropriate after gathering opinions from stakeholders, the case can be settled without confirming the violation. The process includes deciding whether to initiate the procedure → preparing a draft consent decision → gathering stakeholder opinions → deliberating and finalizing the consent decision.

Allegations Against Broadcom

Broadcom is a manufacturer of system-on-chip (SoC) components for pay TV set-top boxes and was allegedly involved in the following anticompetitive practices with domestic set-top box manufacturers:

1. Requiring manufacturers to propose only set-top boxes equipped with Broadcom’s SoC when bidding for contracts with pay TV service providers (who purchase set-top boxes).
2. Forcing manufacturers to replace SoCs from competing firms with Broadcom’s SoCs in projects where other SoCs had already been selected.

As a result, domestic set-top box manufacturers followed Broadcom’s demands, proposing set-top boxes equipped with Broadcom’s SoCs to pay TV providers and proceeding with production and supply accordingly. The KFTC had been investigating whether these practices violated the Fair Trade Act.

Broadcom’s Voluntary Corrective Measures

Before receiving the KFTC’s examiner’s report, Broadcom voluntarily applied for a consent decision to improve competition in the system semiconductor market and support the growth of fabless semiconductor startups and SMEs.

 

The main aspects of Broadcom’s proposed corrective measures are as follows:

• Broadcom will not require its trading partners (domestic set-top box manufacturers) to exclusively use its SoCs.
• Broadcom will not amend existing contracts in a way that disadvantages its trading partners.
• Broadcom will not impose contractual conditions requiring trading partners to purchase more than 50% of their SoC demand from Broadcom, nor will it provide pricing or non-pricing incentives (such as technical support) based on such conditions.
• Even if trading partners refuse to meet Broadcom’s purchase ratio demands, Broadcom will not retaliate by halting, delaying, or modifying SoC supply or withdrawing existing benefits.

To ensure compliance, Broadcom will operate a compliance program, conducting annual Fair Trade Act training for its employees and reporting its compliance status to the KFTC every year.

Broadcom’s Additional Support Measures for the Domestic Semiconductor Industry

Alongside its corrective measures, Broadcom has also proposed initiatives to support domestic fabless and system semiconductor startups and promote industry-wide cooperation, including:

1. Establishing and funding an education center to train semiconductor experts and workforce.
2. Providing business consulting and infrastructure support for fabless and semiconductor startups.
3. Hosting semiconductor-related seminars and conferences and supporting industry promotional activities (such as exhibition halls and PR campaigns).

To implement these initiatives, Broadcom has pledged KRW 13 billion in funding.

KFTC’s Decision and Considerations

The KFTC considered several factors in deciding to initiate the consent decision process, including:

• The nature of the case,
• The effectiveness of the proposed corrective measures in improving transaction practices,
• The protection of other market participants,
• The balance between the proposed remedies and potential penalties if a violation were confirmed.

The decision also took into account precedents from other jurisdictions:

• The European Commission resolved a similar case in October 2020 through a Commitment Decision.
• The U.S. Federal Trade Commission (FTC) settled a similar case in November 2021 through a Consent Order.

Considering these global precedents, the KFTC determined that swiftly implementing Broadcom’s corrective and cooperative measures aligns with the public interest, ensuring fair competition and transaction practices in the domestic system semiconductor market.

 

Moreover, this decision holds significant meaning as it encourages a global semiconductor leader to support the growth of domestic semiconductor startups and SMEs, contributing to the development of South Korea’s system semiconductor industry.

 

The KFTC plans to promptly finalize the corrective measures into a draft consent decision, gather opinions from stakeholders, consult with relevant government agencies, and submit the final proposal for deliberation at a full commission meeting in the near future.