Original URL: http://www.theregister.co.uk/2012/03/16/samsung_lg_price_fixing/

Samsung and LG hit with MASSIVE price fixing fine

Korean mobile firms colluded to con punters

By Phil Muncaster

Posted in Mobile, 16th March 2012 03:41 GMT

South Korean regulator the Fair Trade Commission (FTC) has slapped a 45.3bn won (£25.5m) fine on mobile phone operators and handset makers in the country including Samsung and LG after finding them guilty of price fixing and consumer fraud.

The Yonhap news agency reported that handset giants Samsung Electronics Co and LG along with Pantech, and mobile operators SK Telecom, KT and LG Uplus were all judged by the FTC to have defrauded consumers.

The scam reportedly worked by the handset makers artificially inflating the price of certain handsets which the operators could then offer on contract at discounted prices to incentivise customers into buying them.

In total, 209 models were reportedly marked up artificially in this way.

SK Telecom was the worst offender, if the fines levied are anything to go by, having been hit by a 20.2bn won (£11.4m) penalty, while Samsung was the naughtiest handset maker, having its wrists slapped with a 14.2bn won (£8m) fine. Carrier KT got off with a 5.1bn won (£2.9m) fine.

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

Aside from the financial penalties levied, the firms involved have been ordered to reveal exactly how much they provided in various incentives to encourage sales. Such incentives will also be banned by the FTC in future, the report said.

Price fixing is not uncommon in the South Korean tech space.

Back in 2008, for example, LG was found guilty of conspiring with Sharp and Taiwanese firm Chunghwa in a plan to drive up the price of LCD monitors.

The US authorities fined the Korean electronics giant $400m for that one, and rival Samsung was also subsequently caught in the fall out as investigators dug deeper into the cartel. ®