FTC fines KT $1.9 million for unfair practices

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FTC fines KT $1.9 million for unfair practices

The nation’s antitrust agency slapped the second-largest mobile carrier, KT, with a more than 2 billion won ($1.9 million) fine for treating a subcontractor in an unfair manner.

The Fair Trade Commission said yesterday that KT should pay 2.08 billion won for unfairly canceling a contract that it made with a small tablet PC maker.

In 2010, KT ordered 200,000 units of the “K-Pad” from Enspert, a small mobile device manufacturer.

According to the FTC, KT, which was lagging behind its archrival SK Telecom after it launched services for Samsung’s Galaxy Tab, decided to market its own tablet in a hurry.

KT released 30,000 units into the market, but sales were slow. It then repeatedly postponed orders for the other 170,000 units, saying that the products had defects and were low in quality.

In March 2011, KT canceled the contract and ordered 40,000 units of another type of tablet PC. Enspert couldn’t disagree with KT because most of its sales are made to the company, the FTC said.

The defects in the products were problems with the Android operating system and were not the responsibility of the tablet PC maker, the commission said.

“The cancellation is unfair since [KT] did it even though the company wasn’t responsible for the problem,” the commission said in its report.

KT also deliberately conducted quality tests on the products in an unclear way, the FTC said, making it difficult for the company to pass.

“In the IT field, such contractors suffer difficulties if their clients keep changing quality standards,” an FTC official said. “Under the current government’s creative economy initiative, such practices in the field will be closely monitored and punished.”

In response to the FTC’s announcement, KT released a statement saying, “The fine on KT is unfair because Enspert wasn’t able to pass our test due to serious defects in the tablet PC.”

The company said it will seek legal means to prove the legitimacy of its actions.

BY SONG SU-HYUN [ssh@joongang.co.kr]

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