LG firms under anti-trust probe

Lee Sang-chul, LG Plus CEO and vice chairman, speaks at the 5G Global Summit at BEXCO, Busan, Monday. / Yonhap

By Kim Yoo-chul

The Korea Fair Trade Commission (FTC) plans to investigate LG Uplus for alleged unfair cross-affiliate business practices.

Rep. Kim Ki-shik of the main opposition New Politics Alliance for Democracy claimed that LG Uplus bought handsets from LG Electronics in large quantities at inflated prices.

"LG Electronics suffered operating losses from 2011 to 2012, but returned to the black in 2013 after a helping hand from Uplus who purchased many LG-manufactured handsets," Kim claimed. He insisted that it contributed to Pantech’s bankruptcy.

"Such unjustified support of LG Electronics should be immediately corrected," said Kim.

In response, FTC Chairman Noh Dae-lae said at a session of the National Assembly, Monday, that the fair trade watchdog will check whether LG Uplus unfairly supported LG Electronics.

On Tuesday, FTC officials confirmed that the agency will investigate whether LG Uplus’s purchases of LG Electronics' smartphones and tablets would breach local competition law.

The semi-annual report said the value of handsets bought by LG Uplus from LG Electronics amounted to 579 billion won in the first half. LG Uplus spent 1.24 trillion won for handset purchases in the January-June period.

"Excessive internal trading between the two LG affiliates hurts fair competition," said an FTC official, asking not to be identified.

Since 2009, transactions between LG Uplus and LG Electronics have been increasing. In 2009, LG Uplus spent 600 billion won to purchase LG Electronics mobile phones.

In 2013, LG Uplus posted 11.45 trillion won in sales, 542 billion won in operating profit and 277.5 billion won in net profit.

The FTC official said the government agency is closely looking into "deep-rooted" unfair business practices.