LG Uplus paid illegal incentives to attract Internet subscribers

By Lee Kyung-min

LG Uplus provided 63.2 billion won ($57 million) in illegal incentives to employees of its affiliates for four years until 2012 to attract new Internet subscribers, a court ruling shows.

The company continued this illegal practice even after being fined 320 million won by the Fair Trade Commission (FTC) in 2008.

This was disclosed during a court ruling on a lawsuit filed by the company against a district tax office over fines levied on it.

According to the Seoul Administrative Court, the company resorted to the illegal promotion after its newly launched high-speed Internet service failed to attract new subscribers.

From May 2006 until October 2012, the firm asked employees of its affiliates to fetch new customers.

The companies included LG Chem, LG Electronics and LG Household & Health Care.

LG Uplus paid 100,000 won for each new subscriber.

The incentives paid were taken away once the customers terminated their subscriptions.

The company paid 1.25 billion won in tax to the Namdaemun District Tax Office for 63.2 billion won given to employees in incentives.

However, the tax office levied an additional 89 billion won in taxes, and the company filed a lawsuit against the tax office.

The Seoul Administrative Court ruled in favor of LG Uplus to nullify the additional tax.