"Top 3 Mobile Carriers Face Up to 5.5 Trillion Won Fine for Collusion on Phone Sales Incentives"

Assemblywoman Choi Sujin Conveys Internal Opinions of the Fair Trade Commission
Coordinating Schedule for Next Year's First Trial Full Bench Meeting
Three Major Telecom Companies Argue "Broadcasting Commission Administrative Guidance"

The Fair Trade Commission is reportedly set to impose fines totaling up to 5.5 trillion won on the three major mobile carriers over allegations of collusion.

According to Choi Su-jin, a member of the National Assembly's Science, Technology, Information and Broadcasting and Communications Committee from the People Power Party, the Fair Trade Commission has internally decided on a fine ranging from 3.4 trillion won to 5.5 trillion won regarding suspicions that the three carriers colluded on mobile phone sales incentives and transaction conditions.

It has also been confirmed that the commission is coordinating the schedule for a plenary meeting, equivalent to a first trial, early next year.

The Fair Trade Commission sent the review report containing these details to the Korea Communications Commission, Korea Association for ICT Promotion (KAIT), SK Telecom, KT, and LG Uplus.

Next month, the Korea Communications Commission, the regulatory body for mobile communications, plans to proceed with follow-up procedures including hearing opinions from each company.

The proposed fines are approximately 1.4091 trillion won to 2.196 trillion won for SK Telecom, 1.0134 trillion won to 1.689 trillion won for KT, and 985.1 billion won to 1.6418 trillion won for LG Uplus. According to Representative Choi, these amounts are based on the Fair Trade Commission's review report and may be reduced or adjusted after the plenary meeting and other processes.

The Fair Trade Commission applied allegations that these companies colluded on sales incentives and transaction volumes in the mobile number portability market since 2015.

Consumer subsidies for purchasing mobile devices mainly consist of the carriers' publicly announced subsidies and additional subsidies from sales agents or dealerships, with the additional subsidies funded by sales incentives paid by the carriers to the sales agents or dealerships.

The Fair Trade Commission judged that the three carriers shared data on net changes in number portability and adjusted sales incentives to maintain subscriber numbers at similar levels. However, it is reported that the carriers conducted this through the number portability situation team operated by the Korea Communications Commission and KAIT.

The Korea Communications Commission and the carriers maintain that this was merely administrative guidance based on the Mobile Device Distribution Improvement Act (Dan-tong-beop), which has been in effect since October 2014. Since the introduction of the Act, the Korea Communications Commission has provided administrative guidance to keep sales incentives within 300,000 won.

It is also known that the three carriers were instructed to share number portability data at 20 to 30-minute intervals using the KTOA number portability system.