Inflating handset prices

Mobile phone makers, carriers should stop deceiving consumers

The Fair Trade Commission (FTC) has begun an investigation into suspicions that local mobile phone makers and telecom operators have been colluding to inflate the prices of smartphones. The FTC sent investigators to the headquarters of Samsung Electronics and LG Electronics last week to conduct an investigation. SK Telecom and other wireless carriers will face a probe soon.

Samsung and LG are suspected of marking up the prices of their phones before handing them over to the operators. The carriers then falsely advertised the products as discounted or with special incentives to consumers. This tricked them into believing that they were getting a bargain, although the products should not have been so expensive to begin with.

This investigation comes two years after the People's Solidarity for Participatory Democracy, in its complaint along with the FTC, accused the two electronics giants of price rigging and consumer fraud. Apple has not been pointed out.

Inflating handset prices is an act of enticing customers by deception banned under the Monopoly Regulation and Fair Trade Act. It is a trick used to deceive consumers and disturb the market order. The practice should be stamped out through a thorough investigation.

This is not the first time that the FTC has probed price-fixing schemes related to handsets. In 2012, it slapped a combined fine of 45.3 billion won ($40 million) on Samsung, LG and Pantech as well as mobile operators. The companies then defied the FTC's fines, arguing that their “campaigns” were not uncommon as a marketing tool. But they lost the case in the Supreme Court last October.

The FTC's latest probe raises fears that handset makers and telecom operators are continuing to collude to fix phone prices to defraud consumers. The dispute over costly smartphone prices has arisen partly due to the complicated price-setting practice, which causes consumers to become numb to the costs. The FTC should act resolutely to bring the practice to an end and stop consumers from suffering further losses.