Fair Trade Commission Finds Collusion in Sales Incentives Among 3 Major Telecoms
Broadcasting Commission "Considering Submitting Additional Opinion to Fair Trade Commission"
Only 3 Telecoms Struggle Amid Many Inter-Agency Disagreements Over Mobile Subsidy Law
The Korea Communications Commission (KCC) plans to reiterate its opposing view on the Fair Trade Commission's (FTC) judgment regarding the collusion of the three major mobile carriers. The FTC previously sent a review report, equivalent to a prosecutor's indictment, to the three carriers, but the KCC leans toward the opinion that this is to comply with the Act on the Improvement of Distribution Structure of Mobile Communication Terminals (the 단통법, Dantongbeop).
According to industry sources on the 25th, the KCC is considering submitting an additional opinion as the FTC reviews imposing fines on the three carriers for colluding on sales incentives. Ban Sang-kwon, Market Investigation Officer at the KCC, said, "Since the FTC has not made a final conclusion, we intend to continue explaining the KCC's position," adding, "We are also considering submitting an additional opinion."
The KCC has expressed opposition to the FTC's investigation process from the beginning. Last month, it officially submitted an opposing opinion letter against the FTC's investigation, and even after the three carriers requested the FTC to "raise their voices" in the same month, the KCC met with FTC officials to convey opinions related to the investigation. Officer Ban said, "It is regrettable if the characteristics of the Dantongbeop, which controls prices, were not reflected."
The three carriers also claim they are unfairly treated. The Korea Association for ICT Promotion (KAIT), of which the three carriers are members, stated in a February position paper that it formed a 'Situation Room' to operate and monitor the market under the KCC's direction for the purpose of complying with the Dantongbeop. An industry official said, "It was an activity to comply with the law according to the law enforcement of the relevant ministries," adding, "There are facts that differ from the actual situation, and we plan to actively clarify them in the future."
The FTC stated that it noted in the review report that the three carriers deviated from the KCC's administrative guidance. Kim Jung-ho, Team Leader of the Service Cartel Investigation Team at the FTC's Cartel Investigation Bureau, said, "Based on subscriber net increase and decrease statistics, we believe they agreed on number portability subsidies to restrict competition." When the number of subscribers was low, the carriers raised sales incentives to recover them, and when the number was high, they lowered sales incentives, balancing among the three mobile carriers.
However, the KCC said that coordination is needed regarding the specific contents of the opinion. They decided to make a final decision after reviewing the review report.
Experts pointed out that the disagreement between ministries puts only the three carriers in a difficult position. Kwon Nam-hoon, Professor of Economics at Konkuk University, said, "The law itself is controversial, and if it restricts competition, the FTC should have strongly opposed the problematic parts when the Dantongbeop was established," adding, "With the ambiguous fate of the Dantongbeop and disagreements between ministries, only the operators are suffering."
Since the enactment of the Dantongbeop in 2014, the KCC has imposed a total of 142.2 billion KRW in fines on the three carriers for violations through 2022. The fines were distributed as follows: SK Telecom 72.1 billion KRW (50.7%), LG Uplus 38.1 billion KRW (26.8%), and KT 31.9 billion KRW (22.5%).
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