SEOUL, March 15 (Yonhap) -- South Korea's corporate watchdog on Thursday slapped a combined fine of 45.3 billion won (US$40.1 million) on domestic mobile phone manufacturers and telecommunications operators for price rigging and consumer fraud.
The Fair Trade Commission (FTC) said the companies colluded to inflate the prices of cell phones and then advertise they were offering considerable incentives. This practice effectively tricked consumers into believing they were getting a bargain for buying new phones.
Handset makers Samsung Electronics Co. and LG Electronics Inc. and Pantech Co. as well as mobile operators SK Telecom, KT Corp. and LG Uplus Corp. have been found to have defrauded consumers, the FTC said.
On top of the fine, the companies have been ordered to release information on how much they provided in incentives to fuel sales.
The FTC, in addition, took administrative steps to ban these companies from offering new sales incentives.
Top mobile carrier SK Telecom was slapped with the largest fine of 20.2 billion won, followed by Samsung Electronics with 14.2 billion won and No. 2 mobile carrier KT with 5.1 billion won.
Mobile phone manufacturers marked up the prices of 209 models they handed over to mobile service operators, while operators advertised they were offering discounts on products and services that should not have been so expensive in the first place, the watchdog said.
"Companies took advantage of the complicated price setting practice in the mobile telecommunications sector to trick consumers," an FTC official said.
He said companies found to have tricked consumers did not have transparent rules for setting prices on products and services they provided.