The Fair Trade Commission imposed fines on four companies that colluded on rental fees for mobile communication facilities.

On the 25th, the Fair Trade Commission decided to impose a fine of approximately 20 billion won along with a corrective order on three mobile carriers, SKT, KT, LGU+, and SKONS (hereinafter referred to as SKONS), for colluding on rents for the installation of mobile communication equipment (repeaters, base stations, etc.) on apartment buildings and rooftops. SKONS is a wholly owned subsidiary of SKT.

The Fair Trade Commission imposed fines of approximately KRW 8.6 billion on each of the three companies: KT, KRW 5.8 billion on LG Uplus, KRW 1.4 billion on SK Telecom, and KRW 4.1 billion on SKONS.

The three companies rent about 4.5 pyeong of rooftops of apartments and buildings or small pieces of land to install communication equipment such as base stations and repeaters. In order to build a nationwide network, the telecommunications companies are establishing bases in each region and installing them in geographically advantageous locations.

In apartments, rent is determined through negotiations between the tenants' representative meeting or management office and each mobile carrier. Rent is included in the income of the apartment complex and used as a long-term repair fund, thus reducing the burden of management costs on residents.

As the costs of installing facilities skyrocketed due to competitive leasing during the introduction of 4G (LTE) services since 2011, the three companies formed an asset management team and regional council at KT around March 2013 to reduce leasing costs and curb the nationwide trend of increasing rents, and began collusion that continued until around June 2019.

The three companies established a 'regional rent guideline' to be applied commonly when installing new communication facilities in new apartment complexes, etc., and used it as a standard price when negotiating with landlords. They also agreed on an upper limit on the rental fee (free in principle, up to 100,000 to 300,000 won per year) to be applied when installing additional 4G and 5G equipment in existing leased areas.

For approximately 6 years and 3 months, the average annual rental fee per high-value local contract decreased by approximately 940,000 won from approximately 5.58 million won in 2014 to approximately 4.64 million won in 2019, and the average annual rental fee per new contract decreased by approximately 400,000 won from approximately 2.02 million won in 2014 to approximately 1.62 million won in 2019.

In determining the illegality, the Fair Trade Commission stated that “in the rental market (location of mobile communication equipment by area where mobile communication equipment coverage can be designed), the three companies are the only demanders and have a market share of virtually 100%, making it difficult for other companies to enter the market.”

Accordingly, he said, “In order to build an efficient network through competition in communication quality, we have limited the competition among the three companies to install communication facilities in the ‘optimal location’ first,” and “As it takes a considerable amount of time for the three companies to cooperate and negotiate with landlords to reduce rent, there are concerns that this will delay the installation of communication facilities, limiting the competition in communication quality among the three companies in the mobile communication service market or harming consumer welfare.”

He also said, “This measure is significant in that it is a case of detection of collusion between large corporations that directly causes harm to apartment residents, etc., and makes it clear that even if there is no agreement on the final price, if such an agreed price affects the determination of the final price, it is considered hard-line collusion regardless of the name, such as the proposed price or base price in the negotiation.”