Computer Business Review

Mobile operators slapped with fine for defrauding customers

Tineka Smith

11:39, March 16 2012

South Korea’s regulatory authority for economic competition, the Fair Trade Commission, has hit mobile phone operators with a hefty fine for mobile phone fixing.

The Fair Trade commission has ordered mobile phone operators and device makers including Samsung, LG, and Pantech, to pay a combined fine of 45.3bn won (£25.5m) after finding them guilty for mobile price fixing and consumer fraud.

The companies involved, which included mobile carriers SK Telecom, KT Corp. and LG Uplus Corp, were discovered working together to inflate mobile phone prices and then advertise they were offering better deals. The practice tricked customers into believing they were getting a deal for buying a new phone.

The FTC has taken steps to prohibit the companies involved from offering future sales incentives and the companies have been told to release information on how much was offered in incentives.

SK Telecom was hit with the biggest fine of 20.2bn won (£11.4m) while the handset maker, Samsung, was given a 14.2bn won (£8m) fine and Mobile carrier, KT Corp walked away with a penalty of 5.1bn won (£2.9m).

The FTC found that 209 models in total were marked up by mobile phone manufacturers when handed over to mobile service operators, who in turn advertised discounts on products and services that were already too expensive in the first place.

"Companies took advantage of the complicated price setting practice in the mobile telecommunications sector to trick consumers," an FTC official said.

This is not the first time mobile device makers have been found for price fixing. In 2008 LG Uplus Corp, Sharp, and Chunghwa Picture Tubes admitted to taking part in a LCD monitor price fixing conspiracy. The companies ended up paying a combined fine of $585m.

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