This article was published on March 12, 2025, at 4:32 p.m. on the ChosunBiz RM Report site.
The Fair Trade Commission sanctioned the three mobile carriers—SK Telecom, KT, and LG Uplus—for colluding on number portability, leading to a direct clash with the Korea Communications Commission. This unprecedented situation marks a conflict between government agencies in sanctioning private corporations.
The Korea Communications Commission rebuffed the claims, saying the three mobile carriers were merely complying with regulations regarding the Device Distribution Act, while the Fair Trade Commission raised suspicions that the Commission’s regulations tacitly approved or facilitated the trio's collusion.
Tensions escalated between the two agencies, particularly after a representative from the Commission said during a plenary meeting, "I feel insulted as an independent regulatory body." A Fair Trade Commission investigator countered, saying, "Despite seven joint meetings, the Commission reversed its position at the end of last year."
As the two regulatory agencies within the government issue opposing interpretations of the same issue, concerns about policy confusion and a decline in regulatory credibility are rising.
◇ Fair Trade Commission: 'The three mobile carriers controlled the market for seven years.'
The Fair Trade Commission determined that the three mobile carriers coordinated among themselves from 2015 to 2022 to prevent a concentration of subscribers on specific operators in the number portability market. They adjusted the way they provided sales incentives to maintain market share, effectively eliminating competition for attracting subscribers in the mobile communications market.
According to internal conversations released by the Fair Trade Commission during the plenary meeting, a KT official stated in March 2015, "It's true there's discontent between the two companies, and given that we faced a net loss last week, we hope that this week, at least, the other companies will concede to KT." During the same period, a representative from SK Telecom mentioned, "Due to the net loss issue, I would like to expand rebates to achieve net growth."
In addition, a representative from SK Telecom stated in July 2016, "We lead by example, even in a net loss situation..." To this, a KT official responded, "Yes, I must stick to this approach. It's not looking good at all." This was part of the communications obtained by the Fair Trade Commission from the 'situation team group chat.'
A representative from LG Uplus commented to a telecommunications association official in April 2022, "It's awkward to handle net growth without a policy in place. Today, I will stick to the basics," adding, "You can see it as me holding back to avoid stimulating other companies rather than seeking net growth." The Fair Trade Commission viewed this as evidence that the three mobile carriers colluded to artificially adjust their market shares.
◇ Korea Communications Commission: 'We were merely following government regulations... we cannot be seen as colluding.'
The Korea Communications Commission stands firm that there’s no problem with these discussions among the mobile carriers. The Commission argues that the three mobile carriers adjusted their sales incentives according to its regulatory guidelines, clarifying that this was not collusion. They maintained that operating the market status team was a measure to prevent an overheated subsidy distribution, asserting that the mobile carriers simply complied with government regulations.
A Korea Communications Commission official emphasized, "Could the three mobile carriers not follow the enforcement of the Commission's laws?" and added, "Severe sanctions such as penalty surcharges, warnings, inspections, business suspension, penalty surcharges, and criminal charges were imposed on operators that did not comply with the regulations."
In fact, the Korea Communications Commission has imposed a total of 32 penalty surcharges on the three mobile carriers for reasons including discriminatory incentive distribution, amounting to a cumulative total of 146.4 billion won, and they have also taken measures such as criminal charges and business suspensions. The Commission claims that under such a strict regulatory environment, the three mobile carriers had no incentive to collude.
Furthermore, a Korea Communications Commission representative stressed, "Among the 20 actions specified in the review report, there are no instances where the directives deviate from the Commission's orders." He also countered, saying, "It is regrettable to claim that the interests of the three mobile carriers and the Commission are aligned."
Amid starkly conflicting positions between the Fair Trade Commission and the Korea Communications Commission, the Fair Trade Commission also pointed out that the three mobile carriers attempted to exploit the Commission's administrative guidance.
According to internal conversations made public by the investigators, a representative from SK Telecom stated, "The worst-case scenario is for collusion issues to grow, causing the Korea Information & Communication (KAIT) project to be suspended, and weakening the administrative guidance from the Commission." The Fair Trade Commission assessed this as evidence that the three mobile carriers were adjusting the market while worried about the Commission's investigation.
On the other hand, the Korea Communications Commission maintains that the Fair Trade Commission is over-interpreting the regulations of the Device Distribution Act. A Commission representative rebutted that "it is unfair to classify the Fair Trade Commission's law enforcement as collusion." The three mobile carriers asserted that they were merely adhering to the Commission's Device Distribution Act regulations while striving to maintain their market competitiveness and did not engage in collusion.
◇ The collusion of the three mobile carriers ultimately leads to consumer harm.
The Fair Trade Commission views that the collusion of the three mobile carriers has significantly restricted competition in the mobile communications market. The average daily net changes in number portability for the three carriers dropped from about 3,000 cases in 2014, prior to collusion, to about 200 cases after 2016. Additionally, the total daily number of number portability cases decreased from 28,872 in 2014 to 7,210 in 2022, a reduction of 75%.
The Fair Trade Commission concluded that as the number portability market became restricted, consumers lost the opportunity to choose cheaper rate plans. The three mobile carriers reduced the benefits offered to attract new subscribers, leading consumers to face higher costs. Ultimately, competition in the mobile communications market weakened, increasing household communication expenses.
In the end, the Fair Trade Commission determined that the collusion of the three mobile carriers constituted "anti-competitive behavior by a dominant market player" and decided to impose penalty surcharges along with corrective orders. The penalty surcharges imposed on the mobile carriers are 42.6 billion won for SK Telecom, 33 billion won for KT, and 38.3 billion won for LG Uplus. Initially, it was suggested that penalty surcharges could reach a maximum of 5.5 trillion won, but after adjustments, it was ultimately set at around 114 billion won.
Concerns have also been raised about the controversy over overlapping regulations as the competition authorities and relevant ministries appear to be out of sync regarding sanctions against the collusion of mobile carriers. In response, a Fair Trade Commission representative stated, "This case only sanctioned collusion that deviated from the Korea Communications Commission's regulations or directives," adding, "Even if collusion involves government administrative guidance, if there is no legal basis to justify anti-competitive behavior, it constitutes a violation of the Fair Trade Act." He emphasized, "There are no provisions in the Device Distribution Act regarding exceptions for competition." A mere compliance with regulations cannot absolve collusion.
Professor Lee Hwang of Korea University School of Law remarked, "The conflicts between the Fair Trade Commission and the Korea Communications Commission are problems that have been recurring for decades," adding, "There are no precedents that exclude the application of the Fair Trade Act simply because of collusion guided by administrative guidance." He stressed, "The key is whether the administrative guidance from the Korea Communications Commission directly induced the collusion of the three carriers," noting that even regulatory bodies should be cautious about administrative guidance that restricts competition.
Meanwhile, the three mobile carriers are also considering legal action in response to the Fair Trade Commission's judgment. SK Telecom stated, "We regret the Fair Trade Commission’s decision. We merely complied with the Device Distribution Act, and there was no collusion," adding, "We plan to seek legal action after receiving the decision document." LG Uplus stressed, "The three mobile carriers followed the Korea Communications Commission's regulations and have never made a separate agreement with competitors," asserting, "Receiving unreasonable sanctions due to the clash between regulatory agencies is not appropriate." KT also stated, "We will review various response measures, including legal actions, after receiving the Fair Trade Commission's decision document."