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Photo = Yonhap news |
[Alpha Biz= Paul Lee] The Fair Trade Commission (FTC) of South Korea will begin its review process regarding the alleged collusion on sales incentives among the country’s three major telecom companies—SK Telecom, KT, and LG Uplus.
According to industry sources, the FTC is set to hold hearings on the case on February 26 and March 5, during which it will decide on the level of penalties. Given that the related revenue is estimated to be in the tens of trillions of KRW, it is expected that the fines could be substantial.
The three telecom companies are accused of colluding on sales incentives from 2015 to 2022 in the mobile number portability market, adjusting subscriber numbers through coordinated efforts. It is alleged that, after each business day, the companies shared internal data on new subscriber numbers and number portability subscriber figures.
The telecom companies have maintained that they were merely following the guidelines set by the Korea Communications Commission (KCC) and paid sales incentives within the legally allowed limit of 300,000 KRW, asserting that this was not collusion. The KCC introduced the "Improvement of Mobile Device Distribution Structure Act" (the "DanTong Law") in October 2014, which set the baseline for sales incentives, and the telecom companies claim to have complied with this law.
However, the key issue in this case is not the scale of the sales incentives but the companies’ avoidance of fair competition, ultimately harming consumer welfare. According to Article 19(1) of the Fair Trade Act, business operators are prohibited from engaging in practices that unfairly restrict competition, including agreements on prices, production quantities, and terms of transactions. If the telecom companies shared information on sales incentives and used this to limit competition in the market, it could be seen as a violation of this provision.
The FTC’s review report, which is similar to a prosecutor’s indictment, is said to estimate the related revenue at between 28 and 30 trillion KRW. As a result, it is anticipated that the fines could run into several trillion KRW.
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
