Some two months after the largest furor over the political scandal in South Korea was ended with the start of impeachment proceedings and preemptive suspension of powers for President Park Geun-hye, the corporate ramifications of this debacle rears its ugly head stateside. It’s been known that President Park has exerted undue influence on some of her country’s major corporations to bestow favors on a personal confidante, and now that she’s been sidelined while South Korea’s Constitutional Court decides to either accept or reject her impeachment authorities in the country are cracking down hard on all companies that have curried Park’s favor.
One of these is electronics giant Samsung, and thanks to their business dealings with telecom company Qualcomm, now the American corporation finds itself in hostile sights with a mountain of fines being heaped upon them.
Millions in fines
This Tuesday February 21, the Seoul Central District Court filed an injunction by Qualcomm to put a halt to the implementation of a levy by the South Korean Fair Trade Commission fining the American company somewhere around 1 trillion South Korean won ($873 million) done last December. Qualcomm’s filing made a deadline in response to the FTC’s order charging them of unfair exploitation of their market position in the South Korean market, refusing to offer licenses to local manufacturers for their chipsets as well as extorting high patent fees on smartphone makers.
With regards to Qualcomm’s decision to fight the millions in fines through the injunction, the company’s general counsel Don Rosenberg told news media that they see the penalties being heaped upon them as a result of association to Samsung, one of their largest South Korean corporate customers. In addition to a recent product failure in their Galaxy Note 7 phone, the electronics giant has been wracked by repeated investigations by local authorities due to having allegedly funneled money to the private enterprises of cult leader Choi Soon-sil, on account of her friendship with President Park.
Commercial interests
According to Rosenberg, "The incorrect decision is the product of an unfair process that we believe was heavily influenced by commercial interests." He points out that former Fair Trade Commission vice-chairman Kim Hak-kyun may have made an unfair decision against Qualcomm last year. “The recent reports about the special prosecutor’s investigation into Samsung’s connection to the former Vice Chairman of the FTC, who oversaw our case, has increased our level of concern,” he added. In addition to Samsung, LG Electronics pays an annual license fee to Qualcomm to the tune of 1.5 trillion won to use some of their chipsets and other tech for their own smartphones.
