SK Telecom, LG Uplus, KT Fined for Alleged Rent Price Fixing Collusion

South Korea's Fair Trade Commission (FTC) fined SK Telecom, KT Corporation, and LG Uplus on Thursday, Jan. 25. The commission said the local telecom firms were penalized for unfair business practices centered on rental price fixing.

Rent Price Fixing Allegation

The leading mobile carriers in the country allegedly colluded to reduce rental fees for facilities and locations that hold their respective equipment. According to The Korea Times, the FTC slapped SK Telecom, KT Corporation, and LG Uplus with a KRW20 billion fine of around $15 million in US dollars.

In addition to the hefty fine, the competition regulator ordered the three firms to amend and correct their improper business method of lowering rental costs, a practice the FTC said continued for six years - from 2013 to 2019.

The agency said that based on its investigation, it was discovered that the telecom companies formed a joint response team amid the increasing rental fees for facilities at that time. The firm-owned equipment was installed on these sites after the fourth-generation (4G) mobile service was activated nationwide.

Effect of the Collusion

The team focused on trimming down rental fees, especially at apartment rooftops where telegraph repeaters were put up. SK Telecom, LG Uplus, and KT Corp. paid the necessary fees for using private spaces but are said to have conspired to set fixed rental prices. The regulator said that this unfair act caused financial losses to tenants.

Yonhap News Agency reported that through the unfair practice, the mobile carriers could secure cheaper rental contracts that only cost them an average annual rental fee of just KRW4.64 million, previously priced at KRW5.58 million.

"The practice had directly caused harm to residents of apartments and those concerned, and hampered competition to enhance service quality," an official of the FTC stated.

Photo by: KT Corp. Website