updated 12:20 pm EDT, Thu March 15, 2012
Korean phone makers accused of hiking pricines
South Korea's Fair Trade Commission issued across-the-board fines on Thursday to domestic phone designers and carriers for price fixing. IT ruled that LG, Pantech, and Samsung, as well as three dominant carriers KT, LG Uplus, and SK Telecom, had colluded on the prices of phones. The group was accused of artificially inflating the prices of cellphones, only to pretend they were offering a discount for what was supposed to be a less expensive device.
The involved companies exploited the "complicated price setting practice" in cellphones to fool Korean customers, according to the FTC. The rermarks are likely allusions to carrier subsidies in return for contracts.
The companies are facing fines equivalent to $40.1 million, led by the $17.8 million fine for SK Telecom, $12.6 million for Samsung, and $4.5 million for KT. All of the companies also have to reveal how much they gave in "incentives" with the pricing strategy.
FTC fines underscore the problems of what's considered an insular Korean cellphone market. LG and Samsung in particular are both chaebols, or conglomerates so large that they dictate a large part of South Korea's welfare. Their power over the local cellphone industry has let them exert pressure and keep themselves high up in smartphone ranks despite foreign companies like Apple entering the market. In one incident, Samsung is believed to have punished KT for carrying the iPhone by withholding some of the support it was giving other carriers. [via Yonhap News Agency]