Time to root out cell phone price-rigging
A price-rigging case involving cell phone makers and mobile service providers is a classic example of ripping off consumers. The unfair practice has long hampered free and fair competition in the nation’s handset market and the telecommunications sector.
On Friday, the Fair Trade Commission (FTC), the nation’s antitrust regulator, imposed a combined fine of 45.3 billion won ($40 million) on local mobile phone manufacturers and telecom operators for price-fixing. The firms subject to the penalty are Samsung Electronics, LG Electronics, Pantech, SK Telecom, KT Corp., and LG Uplus.
The accused companies colluded to inflate the prices of cell phones by an average 225,000 won in order to cover the provision of financial incentives for consumers. This means that the incentives came from the pockets of handset buyers and subscribers. The firms cheated consumers into believing that they purchased cell phones at discounted prices with the help of the incentives.
Such a practice is a ploy of defrauding consumers. It is far from a legitimate marketing strategy of promoting sales and services. It runs counter to fair trade rules and the market economy principle. Pinching money from the pockets of customers is not what the electronic giants and mobile service operators should be resorting to.
Enterprises in a capitalist society have the right to make profits through their business operation. And they are allowed to make every effort to maximize their profits. However, they should do business in a fair and transparent manner. In this regard, price rigging and other anti-competition activities cannot be justified under any circumstances.
Nowadays, most companies adopt customer-first or consumer-satisfaction policy, vowing to protect the interests of buyers of their products or services. They also stress the importance of corporate social responsibility. But the mobile phone case shows that a large number of firms have paid only lip service in respecting consumer rights.
No business can exist without customers. But there are still many companies trying to reign over consumers. It is imperative for CEOs and managers of corporations, especially family-run conglomerates, to refrain from relentlessly worshiping money out of greed. They should push for managerial reform to improve transparency and accountability. They must keep in mind that the market system cannot survive without fair trade.