The De Facto Abandoned Subsidy Disclosure... Last Meeting of the Dantong Act Council Today

Introduction of Council Discussion Contents at the Forum on the 10th... Outline of the Amendment to the Dantong Act

[Asia Economy Reporter Seulgina Jo] The plan to disclose sales incentives paid by mobile carriers to dealerships and retailers in order to prevent illegal subsidies in the device distribution market has effectively fallen through. Instead, measures are being pursued to allow differential public subsidies based on subscription types such as number portability, and to strengthen post-regulation by increasing fines for violations.

According to the Korea Communications Commission and related industries on the 7th, the "Mobile Device Distribution Structure Improvement Council," launched to amend the Device Distribution Structure Improvement Act (Device Act), held its final meeting on this day to conclude discussions spanning the past six months. The related details are expected to be disclosed at an academic forum held at the Korea Federation of Banks on the afternoon of the 10th. With intense interest from both inside and outside the industry as this essentially outlines the forthcoming amendment, the government plans to finalize the amendment within the year and submit it to the National Assembly next year.

The biggest point of interest in this amendment?the disclosure of sales incentives?has ultimately been decided against. This is due to concerns over potential infringement of corporate trade secrets if sales incentives are disclosed. A council official conveyed the atmosphere, saying, "The proposal to disclose incentives will be difficult to include," and "There were also repeated concerns that it could undermine market autonomy and backfire."

Instead, a plan is being pursued to allow differential public subsidies, which are currently prohibited under the law, and to flexibly shorten the subsidy disclosure period. In this case, mobile carriers will be able to provide different public subsidies depending on subscription types such as new subscriptions, number portability, and device changes, which is expected to revitalize the market.

A government official explained, "The direction of this amendment is to partially ease regulations that were excessively strict and led to repeated violations," adding, "Instead, opinions are being gathered to strengthen post-regulation." Measures under consideration include raising fines for violations of disclosure standards from the current 10 million KRW to up to 50 million KRW, and including the three major carriers' voluntary monitoring as a subject of sanctions under the Device Act.

Additionally, there was discussion about reducing device cancellation penalties after three months of subscription, but concerns were raised that this could further deepen 'Pontek' (phone tech trading) practices.