The Fair Trade Commission detected collusion among the three mobile telecommunications companies – SK Telecom, KT, and LG Uplus – and imposed a penalty surcharge of 114 billion won. The commission determined that the three companies adjusted their sales incentives to similar levels to avoid competition in attracting number transfer subscribers and controlled fluctuations in market share. Normally, sales incentives should have been increased to attract subscribers, but the three companies maintained or adjusted sales incentives to continue their collusion and avoid competition.
The Fair Trade Commission announced on the 12th that it has decided to impose penalty surcharges along with corrective orders, viewing the collusive behavior of the three mobile telecommunications companies as 'actions to restrict competition by a dominant market operator.'
The penalty surcharges imposed on the three mobile telecommunications companies are 42.6 billion won for SK Telecom, 33 billion won for KT, and 38.3 billion won for LG Uplus. Initially, there were discussions about the possibility of fines being imposed up to 5.5 trillion won, but after adjustments, it was ultimately confirmed at 114 billion won.
According to the Fair Trade Commission, the three companies agreed to coordinate with each other to prevent fluctuations in number transfer subscribers from becoming concentrated on a specific operator, executing this agreement from November 2015 to September 2022. The Fair Trade Commission classified this as a collusive behavior that limits competition in the mobile telecommunications market and determined that the three companies artificially adjusted each other's market share changes.
After the implementation of the Device Distribution Act (Dan-Tong Act) regulation by the Korea Communications Commission in 2014, the three mobile telecommunications companies operated a 'Market Situation Committee' with the Korea Information & Communication (KICC) to monitor the daily number of number transfer subscribers. The problem arose when a specific operator's subscriber count rapidly increased, leading to adjustments in sales incentives to suppress changes in market share. The operator with increased subscribers lowered sales incentives, while the operator with decreased subscribers raised them, thus controlling subscriber movements.
As collusion continued in this manner, competition within the mobile telecommunications market weakened. In fact, the average number of number transfer increases, which was about 3,000 cases per day in 2014, drastically decreased to around 200 cases in 2016. The total daily number of number transfers fell from 28,872 cases in 2014 to 15,664 cases in 2016, a decrease of 45.7%, and further shrank to 7,210 cases in 2022.
The investigation by the Fair Trade Commission also confirmed indications of prior coordination among the three companies. When subscribers for a specific telecommunications company surged, that company was pressured to reduce its sales incentives, while the company experiencing a decline in subscribers sought cooperation from other companies to raise its sales incentives.
For example, if Company A's subscribers increased sharply, it either independently lowered its sales incentives or negotiated with the other two companies to reduce their sales incentives. Conversely, if Company B's subscribers decreased, Company B would respond by having the other companies adjust their sales incentives upward to allow for an increase. The Fair Trade Commission's judgment indicates that this was not a simple market flow but rather an adjusted collusive behavior following prior discussions.
The Fair Trade Commission assessed that such collusive behavior restricted consumer choice in the mobile telecommunications market and hindered market competition. With 'number transfer,' a core competitive element of the market, artificially restricted, competition among operators diminished, resulting in decreased consumer benefits.
A Fair Trade Commission official noted, 'There will likely be effects of revitalizing competition in the mobile telecommunications market and alleviating the burden of household communication costs.'