Popular Korean manufacturers and carriers have found themselves in a bit of trouble with the authorities. The affected companies include Samsung, Pantech, LG, LG Upius, KT and SK Telecom. Some of these are major world-wide players. And the Korean government, along with the FTC, has fined them with a 45.3 billion won (about $40.1 million US dollars) fee for price rigging and consumer fraud.
In case you have not heard of price rigging before, this is the act of conspiring with competing companies to virtually inflate the prices of their products. This concludes with customers believing that they are getting good offers, and companies deceitfully earning more profits and conducting higher sales.
Such practice is illegal and considered fraud, as it harms fair competition. Not to mention that it is unfair to the consumer. And while the fee is substantial, it may not be very significant. Those $40 million will be paid by all the companies, in conjunction.
The companies with the largest fees are Samsung and SK Telecom. With a bill of 14.2 billion won and 20.2 billion won, relatively. These are followed by KT, which has to pay out 5.1 billion won.
Samsung has sold over 5 million Galaxy S II devices in Korea alone, with about 10% of the country’s population owning the flagship device. This is only counting one country and one of the manufacturers. It is hard to imagine how much extra income said companies drove by price fixing.
In order to find more details, the companies have been ordered to hand in extra details on “offers” provided. And the FTC has banned said companies from offering any new sales incentives.
While it is hard to prove, this may be a world-wide issue. In the US, we have subsidized smartphones that go for very high amounts of cash. While other countries have much lower subsidized prices for the same device, many times free. Of course, the markets are very different, and many factors come into play. But this is just an example.
As we usually say, if a company can get away with charging more, they will. But the major issue here is that competing manufacturers and carriers were working together to inflate prices. Instead of fairly competing with each other to bring the best (real) offers to customers. It is a large plot to benefit from the consumer’s lack of options.