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South Korea’s antitrust watchdog fines KT Corp and LG Uplus over corporate messaging price cuts

1 Dec 2014

South Korean mobile network operators KT Corp and LG Uplus have both been fined by the country’s antitrust watchdog for excessively lowering the price of their respective corporate messaging services, Yonhap News Agency reports. With the pair having been slapped with a combined KRW6.2 billion (USD5.6 million) fine for undermining fair market competition, LG Uplus was penalised the most, with it facing a KRW4.3 billion charge. However, it has been noted that the fine amount is preliminary and will be adjusted after calculating related sales, according to the Fair Trade Commission (FTC).

According to the watchdog, both operators have taken advantage of their respective networks to excessively lower the prices of their corporate messaging services – which allow companies to send clients messages such as notifications of credit card payment or updates on product delivery – effectively forcing out smaller competitors from the growing market. As these minor providers rely on the infrastructure belonging to the cellcos to send the messages, it has been claimed that both had set the price of their own corporate messaging services below cost.

While the corporate messaging services market had long been dominated by smaller companies, the entry of LG Uplus and KT Corp to the sector has seen that situation reversed; according to the report in 2006 the smaller companies combined represented 71% of the market, but last year this figure had slumped to just 29%, with the mobile operator duo accounting for the remainder.

Commenting on the decision to fine the cellcos, the FTC was cited as saying: ‘This case is meaningful in that we have helped level the playing field and created a market condition where competition on merit can be possible.’

South Korea, KT Corp, LG Uplus

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