What happens when Korea’s biggest wireless carriers and Korea’s biggest phone manufacturers get caught offering bogus wireless phone deals to their customers? Well, according to the Yonhap News Agency, Korea’s Fair Trade Commission gets pissed off and slaps those companies with a huge fine — 45.3 billion won ($40.2 million) — for “price fixing and consumer fraud.”
If the fines are any indication, then carrier SK Telecom and Samsung Electronics were the biggest offenders here — they netted themselves a 20.2 billion won ($17.9 million) and 14.2 billion won ($12.6 million) penalty respectively.
Here’s how it all went down. Samsung, LG, and Pantech marked up the prices of a total of 209 phone models before handing them over to the carrier partners that would actually sell them. Then, those carriers would advertise those phones and try to sweeten the deal with price incentives and discounts. The phones that got the price fixing treatment ended up looking like great deals compared to ones that weren’t since their original price tags were inflated.
Of course, the consumer actually buying the phone isn’t actually getting a good deal — they’re paying the same price (or possibly more) for something “that should not have been so expensive in the first place.” What’s really earned the FTC’s ire is that the companies involved essentially lied to their customers about how good the price was in order to build momentum around certain products and services.
Yonhap’s report doesn’t mention which phones in particular were affected by the price-fixing scheme, nor does it mention the time span over which these practices occurred. That information could soon be made public though, as the Fair Trade Commission has ordered each of the companies involved to release a report that lays out how much they’ve shelled out in incentives. In addition to the fines, the Fair Trade Commission has also taken steps to bar these companies from pulling the same stunt again.
Sad to say, but this isn’t the first time that consumer electronics titans Samsung and LG have been caught fiddling with prices. The Korean Fair Trade Commission hit them and four smaller manufacturers with a hefty 194 billion won ($172.7 million) fine last year for colluding to fix prices on their TFT-LCDs. Not long afterward, an antitrust lawsuit was filed against said companies here in the States, to which they eventually settled.