South Korea’s Fair Trade Commission (FTC) announced a crucial development in its investigation of the country’s top telecommunication operators, SK Telecom (SKT), KT, and LG Uplus. The FTC has reached a preliminary decision to impose fines totaling approximately $4.1 billion on these companies. The allegations suggest these telecom giants might have colluded to maintain consistent sales incentives for mobile phone retailers from 2015 to 2022.
If the FTC proceeding concludes with these fines, it could pose a significant financial challenge for the operators. The possible fines exceed their respective net incomes, painting a challenging picture for these industry leaders. However, there is an important perspective to consider. The accused telcos claim their behavior aligns with prior government guidance rather than anti-competitive collusion.
Back in 2014, the Korea Communications Commission (KCC) introduced measures under the Mobile Device Distribution Improvement Act. According to this Act, operators were instructed to standardize sales incentives around 300,000 won ($222) to instill competition in the mobile market. This aimed to prevent drastic handset discounts, ensuring stable prices for consumers.
Despite these intentions, the Act has faced criticism over the years. Instead of promoting competitive pricing, it seemingly sustained higher prices for consumers. Consequently, the South Korean government plans to abolish the Act, questioning its effectiveness in today’s market. Still, the KCC emphasizes that the telcos were simply adhering to official guidance in their incentive actions during the alleged period.
As part of the ongoing debate, KCC Secretary General Cho Sung-eun stated during a National Assembly audit that the incident shouldn’t be lumped into cases of collusion. “The KCC has delivered its opinions to the FTC multiple times, highlighting that it is difficult to view the case as collusion,” he mentioned. Moreover, KCC’s internal investigation did not establish any collusion evidence against the operators.
