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Korean Telecom Giants Face Potential $4.1 Billion Fine Over Price-Fixing Allegations

 |  October 7, 2024

South Korea’s three largest telecom companies—SK Telecom, KT, and LG Uplus—could face fines of up to 5.5 trillion won ($4.1 billion) over allegations of price fixing. The country’s Fair Trade Commission (FTC) is reportedly preparing to impose hefty penalties after claims that the firms colluded to manipulate sales incentives between 2015 and 2022.

Per Korea Daily, the allegations accuse the companies of coordinating the incentives offered to sales branches, which would affect the discounts provided to customers. By allegedly sharing internal data, SK Telecom, KT, and LG Uplus are suspected of keeping their incentives at similar levels, thus maintaining uniform pricing across the market. Early reports suggest that SK Telecom could face fines ranging from 1.4 trillion to 2.2 trillion won, KT between 1 and 1.7 trillion won, and LG Uplus around 985 billion to 1.6 trillion won.

The potential penalties were disclosed by the office of Rep. Choi Soo-jin from the People Power Party (PPP). Choi’s office confirmed that the FTC has tentatively decided on the fines, but the final decision on whether the companies broke the law will be made during an FTC plenary meeting scheduled for early next year.

Following the initial reports, the FTC clarified that no final conclusions have been reached yet. According to Korea Daily, the regulator emphasized that the case is still under review, and further developments will follow before any definitive penalties are announced.

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There have been concerns about potential discrepancies between the findings of the FTC and the Korea Communications Commission (KCC). The KCC, which regulates telecommunications, reportedly found the companies not guilty of price-fixing charges. The KCC’s guidelines suggest maintaining sales incentives at around 300,000 won, a figure that aligns with the telecom companies’ pricing practices. Despite this, the FTC is considering a different perspective as it handles the antitrust aspects of the case.

In response to criticism, an FTC representative assured that the two agencies have been working together throughout the investigation. “The FTC and KCC have been collaborating since the inquiry began and will continue close communication as the case progresses,” said the official, underscoring the importance of cooperation between regulatory bodies.

At a parliamentary hearing, KCC Vice Chairperson Kim Tae-gyu, who is currently acting chairperson, acknowledged the difference in positions between the FTC and KCC, explaining that each agency has its own role and perspective in the matter. While the KCC focuses on the broader regulatory framework for telecoms, the FTC is primarily concerned with competition and market fairness.

Source: Korea Daily