LG Uplus, which aired exaggerated ads claiming "5G service is 20 times faster" from 2017 to 2020 and was hit with about 2.85 billion won in a penalty surcharge, challenged the sanction in court but lost.
According to legal sources on the 4th, the Seoul High Court's Administrative Division 6-3 (High Court Judges Park Young-ju, Kim Min-gi and Choi Hang-seok) on the 24th of last month ruled against LG Uplus in its suit seeking to cancel corrective orders and penalty surcharge payment orders filed against the Korea Fair Trade Commission.
The Korea Fair Trade Commission (FTC) in July 2023 imposed a penalty surcharge of 2.85 billion won on LG Uplus. It found that from Dec. 2017 to Sept. 2020, LG Uplus exaggerated through its website and blog that its 5G service speed was 20 Gbps (gigabytes per second), as if it were 20 times faster than LTE, and advertised that its service was faster than competitors without objective grounds.
In Aug. the same year, LG Uplus filed suit with the Seoul High Court, saying the penalty surcharge was unjust. It argued that 20 Gbps is the theoretical maximum speed, that it had advertised performance would be implemented "gradually," and that consumers with "ordinary attentiveness" would not be likely to mistake it for actual speed.
The court found the FTC's disposition lawful. It determined LG Uplus' ads violated the Act on Fair Labeling and Advertising and posed a serious risk of undermining a fair transaction order.
The court concluded that LG Uplus advertised as if the speed had already been achieved even though the environment—such as base stations and mobile handsets—to realize the speed had not been established. As grounds, it cited claims such as "You can send a 2.5GB large file in just 1 second" and "You can watch 8K ultra-high-definition video without interruption."
It went on to say that "20 Gbps is the maximum speed premised on an ideal environment that cannot be realized in actual use," and that LG Uplus' 5G service cannot be considered 20 times faster than LTE.
The court also called LG Uplus' comparative ads claiming faster speeds than competitors "deceptive."
The court cited as grounds that in the Ministry of Science and ICT's 2020 telecommunications service quality assessment, LG Uplus' 5G service speed was the slowest, and that LG Uplus excerpted only results measured with a device favorable to itself for advertising.
It also recognized that these ads were likely to mislead consumers.
The court noted that measuring data speeds requires expertise and equipment, and that at the time the ads began, 5G technology was new, so consumers could not know its speed from experience. It added, "A considerable number of consumers who saw the ads could well have taken the speed shown in the ads as the actual speed."
The court also rejected the plaintiff's claim that the FTC abused or exceeded its discretion in calculating an excessively high penalty surcharge.
An FTC decision has the same effect as a first-instance ruling. If a party contests an FTC sanction and files an administrative suit, the Seoul High Court and the Supreme Court hear the case in sequence.