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FTC fines SK Broadband and LG U+ for collusion

Nov 22,2019
LG U+, SK Broadband and two smaller companies have been fined a total of 1.26 billion won ($1 million) for colluding in bids for a government messaging project.

According to the Fair Trade Commission (FTC) on Thursday, LG U+ and SK Broadband agreed to allow LG U+ to win the contract for the National Information Resource Service’s mobile messaging service, which sends out urgent public notifications.

The antitrust regulator said that, under an agreement between the two reached in 2014 and also in 2017, SK Broadband pulled out of the competition. LG U+ had been providing the service prior to the tender, and SK Broadband decided it would be better just to receive a payment from the incumbent that mounted an aggressive bid.

SK Broadband never received the payment due to a disagreement over the price, the FTC claimed.

Two smaller companies, MediaLog and Standard Networks, submitted bids in an effort to make the contest appear legitimate.

The 2014 contract was worth 5 billion won.

The same arrangement was reached in 2017 for a contract worth 11.5 billion won.

LG U+ was fined 60.3 billion won, while SK Broadband was fined 30.1 billion won. MediaLog was ordered to pay 9.1 billion won, and Standard Networks 26.2 billion won.

“We hope that [Thursday’s fine] will prevent the frequent collusion practices made in the telecommunications industry and contribute to preventing the government’s budget from being wasted,” said Shin Yong-hee, head of the FTC’s bid-rigging investigation division.

BY LEE HO-JEONG [lee.hojeong@joongang.co.kr]