Samsung, LG, Pantech and Others Fined $40 Million for Price Fixing

It looks like a few South Korean carriers and OEMs have gotten themselves into a bit of trouble with the South Korean government. Samsung, LG, Pantech, SK Telecom, KT and LG Upius have all been fined for price fixing, an illegal scheme which helps drive up the price of products for profit. The carriers and OEMs then advertise the device at a lower price through subsidization. It’s pretty much what most of the world is used to with cellular contracts, but it appears the South Korean government isn’t having any of that. Each of them were fined separate amounts which all added up to about $40 million dollars, with Samsung and SK Telecom getting hit with much of the bill. It sucks, but they have to deal with it. And at the end of the day, this is chump change for these cash cows. [Korea Times via Engadget]

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  • JulianZHuang

    to them, $40m is just a penny….

    • RitishOemraw

      *flies to korea, trying to get a job at Samsung to work for a penny an hour*

  • http://twitter.com/TwiTati Tati

    nm

  • vsl

    I don’t think it sucks. Hope it starts something.

  • Aaron Peromsik

    Here in the US, if you buy the postpaid version of Samsung Exhibit II, T-Mobile will sell it to you for $29 on contract, showing the off-contract price as $329. However Walmart and Amazon sell the prepaid version of the same phone for about $200. Makes you wonder: is T-Mobile subsidizing the prepaid version, or inflating the off-contract price of the postpaid version?

    • spicymeatball

      I really want to know the answer to this.  If T-Mobile started selling phones off contract at reasonable prices they could really change the game.  Makes you think they are inflating along with the carriers to force you into a contract.  It would be great to break this and change to a more European off contract model that t-mo is sort of doing but with huge penalties to buy a phone out right.

  • ultimatedroidfanz

    These are android vendors and that what worries me. I expect and demand fair competition to keep prices low. Shaddy practices like this is a no no. Damn why can’t the news be about another company like say apple. They are overcharging for their products upfront! Unfair!

    • IronHorse01

      Yeah they are overcharging upfront, but people still know what they’re buying and knowingly dish out the money, what these oems were doing Is straight up hidden shady business, glad they got caught

      • Guest

         this is really poor argument.. “people still know what they’re buying and knowingly dish out money..”?

        just think of mac and windows laptops..

        • IronHorse01

          My point is: apples products even if they are overpriced, the price is posted on the product upfront . Apple doesn’t “trick” you into buying, on the contrary , their philosophy is ” here’s how much it is if you still wanna pay it go for it, if not, oh well”
          But it’s all about being upfront and Samsung obviously hasn’t

          • Guest

            yes and it’s called ‘fixing’.. carrier and oems do the same in the US.. the iphones and ipads are overpriced, are the prices fixed?  have to be… it just happened that the companies in korea were caught with this kind of business practice.. the exhibit 2 above is a good example..

            and think of mac and windows laptops.. :)

    • Manbo

       Saying “these are android vendors” is like shooting the broad side of a barn. Pretty much everyone but RIM, Nokia and Apple have or are making an Android handset. 

      And as for *Shady* practices?  Businesses are in it to make money, they will do all they can to make money.  As the old business credo goes “It’s only wrong if you get caught”.
      So it’s a pretty safe bet that any successful company is doing something fishy to boost profits and they’re doing all they can to hide it well.

  • abc

    I’ve said it several times on various blogs. The phone manufacturers and the carriers are in an elaborate price fixing scheme. I’ve been called stupid and made fun of for my comments. Here is the proof. 
     
    I’m just mad this wasn’t in the United States. The carriers here in the states need to be investigated and their little price fixing scheme needs to come to an immediate end.

    edited my original post, it was too long.

    • Ben Kapferer

      I’m upst about it too, but I think it’s less price-fixing than just good old-fashioned supply and demand. What I mean is, people around the world (and carriers, at least in the US) seem to be okay with these prices, so why would the headset manufacturers bother losing potential profits? It’ll take someone willing to shake up the market with low-price products to change the situation (like eMachines did for the PC market about a decade ago).

      • $8357570

        What do you suppose price fixing is other than being found guilty of price fixing?

        Do you understand what you have said?

    • $8357570

      I’ve said it before too. People don’t seem to understand that this is why the $500-800 “unlocked phone” price exists.

    • spicymeatball

      If t-mobiles no contract plans are going to work this needs to happen in the U.S.  I have a great plan at a great price off contract but I pay for my phones. If we could stop the price fixing as a consumer we would be set.  How can we start a movement to stop this.

  • IronHorse01

    Samsung caught cheating and deceiving their clientele? Not really surprised.

    • Manbo

       Why not just make it a blanket statement?

      “*insert brand here* caught cheating and deceiving their clientele? Not really surprised.”

      • IronHorse01

        Most oems do it, guess Samsung is really “unlucky” that they’re usually the ones that get caught the most ;)

        • Guest

          but we aren’t blind to know that apple rip people off more..

          look how much their products are.. ipad, iphone, mac?

  • Eric Silva

    It’s about time somewhere, something happened.  Look, let us view the full (non contract) prices for phones and tablets.  So you can get a good tablet (wifi version) from several retailers (other than samsung and moto) for $400.  Samsung and Moto charge more so that their product seems comparable to the iPad, and doesn’t seem like a cheap option.  For a full price phone it’s $600 to $750.  Why?  I can see some uptick in price because of fitting it in a smaller package, but you would also think the bigger screen would make a tablet cost more.  In my mind those offset each other.  So, if OEMs charged $400 for a full price phone, there would be little to no purchases of on contract phones for $200 to $300.  This really is all a price fixing con so that carriers can lock someone up on contract for 2 years.

  • ari_free

    Apple’s response: Thanks South Korea! Suckers…

  • http://www.motoask.com/ Motorola Atrix forum

    Samsung employing dirty tactics? Whodathunkit