HP under probe for price fixing

By Park Si-soo

Hewlett Packard is under investigation over suspicions of collusion with other multinational information technology giants to fix prices. Reports have it that IBM and Oracle are the other companies involved.

Investigators of the Fair Trade Commission (FTC) raided HP’s Seoul office Friday, officials said.

They took computer records and documents and questioned employees over their suspicions.

“It’s true that FTC officials visited our office last Friday,” said HP spokeswoman Baek Min-jung. But she refused to elaborate, calling the ongoing probe “routine,” pointing out the FTC vowed earlier this year to tighten its monitoring over multinational IT firms.

FTC officials refused to relate the exact reason for the probe, citing an internal rule banning officials from speaking to the media about pending cases.

The regulator made it clear in a 2012 working roadmap, released in December last year, that it would prevent multinational IT firms from abusing their dominant position in the Korean market to prevent damage to consumers and firms.

The investigation comes amid increasing concerns that more Korean firms are heavily dependent on foreign providers of computer servers, storage and database management systems, among others. HP is one of the dominant players in this segment along with IBM and Oracle.

Market watchers believe the FTC will try to confirm whether the three violated the country’s anti-trust law by abusing their dominant market position. The investigation will take some time to reach a conclusion and, if deemed necessary, the FTC will ask the prosecution to take over the case, a move that would seek criminal punishment of those in charge.

On top of this, a prosecution investigation into HP is also underway, also about price fixing, after IT startup Webcash filed a complained with it in March.

The medium-sized e-banking system provider said in a statement that HP had won the right to operate several multi-billion-dollar projects, including one related with the Korea Development Bank, by colluding with smaller bidders.

IBM Koreaand HP Korea were hit hard in 2004 and 2008, respectively, in two separate bribery scandals involving their sales managers and government officials.

The latest case has raised skepticism of the country’s legislation move to ban big IT firms affiliated with chaebol from providing services to the public sector. Critics say the move was initiated to help boost the bottom-line of Korean IT startups.

Yet as long as the crackdown on law-breaking activities by overseas IT giants remains elusive, they said, the legislation could make the market favorable only to foreign players.