LG Uplus and KT Lose Lawsuit to Cancel 6.4 Billion Won Fine from Fair Trade Commission

[Asia Economy Reporter Eunju Lee] LG Uplus and KT filed a lawsuit challenging the Fair Trade Commission's sanctions imposed for driving out corporate messaging service providers by selling corporate messaging services at low prices, but they lost the case.

According to the Fair Trade Commission on the 17th, the Seoul High Court ruled in favor of the Fair Trade Commission in the appellate review of the cancellation lawsuit filed by LG Uplus and KT against the corrective order and fines on January 12. Earlier, on February 23, 2015, the Fair Trade Commission imposed fines of 4.494 billion KRW and 2 billion KRW respectively, along with corrective orders, on LG Uplus and KT, dominant players in the wireless communication network transmission service market.

The Fair Trade Commission judged that they drove out corporate messaging service providers by selling corporate messaging services (value-added communication that uses mobile carriers' wireless communication networks to send text messages to users' mobile phones on behalf of corporate customers) at low prices. LG Uplus and KT, which sell both transmission services (upstream market) and corporate messaging services (downstream market), sold corporate messaging services at prices lower than the average minimum price of transmission services, which was considered a profit-squeezing act that made it difficult for competing businesses.

LG Uplus and KT challenged this by filing a cancellation lawsuit against the Fair Trade Commission's decision at the Seoul High Court and won in January 2018. However, in June 2021, the Supreme Court overturned and remanded the High Court's ruling, stating that the Fair Trade Commission's calculation of the ordinary transaction price was lawful and that there was a possibility of unfairness due to profit-squeezing behavior.

The Fair Trade Commission stated, "This ruling is a leading case related to the type of abuse of market dominance called 'profit squeezing' (an act by a vertically integrated company that monopolistically supplies raw materials while simultaneously producing and selling finished products, excluding competitors by setting raw material prices equal to or higher than finished product prices), and it holds significant meaning," adding, "We will actively respond if the two companies appeal."