Fair Trade Commission "LG Uplus Fails to Pay Other Commissions to Dealers Missing Sales Targets... Corrective Order Issued"

[Sejong=Asia Economy Reporter Joo Sang-don] The Korea Fair Trade Commission (KFTC) announced on the 16th that it has decided to issue a corrective order (prohibition of future acts) against LG Uplus for coercive sales practices by withholding commissions from agencies that failed to meet their ultra-high-speed internet sales targets.

According to the KFTC, LG Uplus's Chungcheong Sales Division imposed new subscriber acquisition targets (TPS) for ultra-high-speed internet on agencies under its jurisdiction from January 2012 to December 2014. At the same time, it set a goal (Hanbang-e yo target) requiring that a certain percentage of the newly acquired ultra-high-speed internet customers subscribe to bundled wired and wireless communication products.

LG Uplus operated a TPS policy that deducted incentives ranging from a minimum of 50,000 KRW to a maximum of 250,000 KRW per unmet target from agencies that failed to achieve these goals.

Additionally, the Chungcheong Sales Division of LG Uplus checked the achievement status of the 'TPS target' and 'Hanbang-e yo target' of agencies in its jurisdiction at the end of each month and deducted the amount corresponding to the shortfall under the TPS policy from the incentives that agencies were supposed to receive under other incentive programs besides the TPS policy. In cases where the deduction amount under the TPS policy exceeded the incentives payable to the agency, LG Uplus further deducted the acquisition commission paid for recruiting new subscribers and the management commission paid for subscriber management tasks. Through this process, LG Uplus withheld a total of 238 million KRW in commissions owed to 155 agencies.

Accordingly, the KFTC decided to issue a corrective order prohibiting LG Uplus from engaging in the same conduct in the future.

A KFTC official stated, "This action is significant in clarifying that any business operator running a complex incentive system should not link commissions that are debts they must pay with the results of operating incentive programs," adding, "The KFTC will continue to monitor acts that undermine competitive order and impose strict sanctions according to principles if violations of related laws are detected."

Regarding the KFTC's sanction decision, LG Uplus stated, "The content announced by the KFTC pertains to cases before 2014, and no such incidents have occurred since 2015," and added, "We will continue to strive to manage our distribution network."

This content was produced with the assistance of AI translation services.