South Korea’s Fair Trade Commission said Wednesday it is looking into whether Samsung Electronics Co. engaged in unfair practices when it supplied NAND flash memory chips to Apple Computer Inc.

“We are currently reviewing the facts but we haven’t launched a full-scale investigation yet,” Lee Seuk-joon, an official at the FTC’s unfair trade practice division said, without elaborating.
Lee’s comments came after local media reported last month that a possible joint investment project between Apple and Samsung collapsed after Apple heard that the FTC may be investigating Samsung.
According to local media reports, a South Korean lawmaker also urged the FTC to conduct an investigation, saying that Samsung’s supply of NAND chips at “below-market prices” was hurting smaller Korean rivals.

Samsung, the world’s largest producer of flash memory chips, has denied violating the law.
Samsung began supplying NAND flash memory chips – widely used in music players and digital cameras – to Cupertino, Calif.-based Apple in the third quarter of this year for use in its hot-selling new IPod Nano music player, which stores data using a flash memory chip instead of a hard disk drive.

On Monday, Samsung extended its agreement with Apple by entering into a long-term contract to supply the chips through 2010. Apple has agreed to prepay Samsung $500 million US.

Last month, the U.S. government imposed a price-fixing fine of $300 million on Samsung for secretly conspiring with industry rivals to fix prices for DRAM, or dynamic random access memory, chips in the United States.

Lee of the FTC said that the commission isn’t looking into Samsung’s domestic rival Hynix Semiconductor Inc. Hynix also agreed with Apple on Monday to supply NAND chips through a long-term contract.

“No one has complained about Hynix, so we aren’t looking into this company,” Lee said.
Samsung shares, which fell sharply Tuesday after news of an alliance by U.S. companies to produce flash memory chips, gained 2.9 per cent Wednesday to 607,000 won ($585).