Korea’s YMCA yesterday said it plans to file a class-action lawsuit against KT and Hanaro Telecom over their price fixing, which caused record fines by the nation’s antitrust regulator last week.
Last Thursday, KT and Hanaro Telecom were fined 115.9 billion won ($115.5 million) and 2.4 billion won, respectively, by the Fair Trade Commission (FTC) for colluding on prices of fixed-line telephones and broadband Internet services.

``The unfair price decision by the cartel activity significantly undermines consumers` rights,’’ YMCA official Chang Wan-ick said in a news conference in Seoul.

Chang said the lawsuit is aimed at rooting out such practices and the WMCA plans to invite plaintiffs for 10 days from Wednesday.

The suit is intended to seek as much as 1 million won per plaintiff in damages from KT and Hanaro Telecom, owned by New York-based American International Group and Newbridge Capital, over their price fixing in landline telephone services.

According to the FTC, KT, the nation’s dominant fixed-line carrier, and runner-up player Hanaro Telecom participated in a series of meetings between April and June 2003 to arrange the price collusion.

At the meetings, KT asked Hanaro Telecom to increase its fixed-line telephone call rates to a level similar to that of KT. At that time, Hanaro’s landline telephone call rates were about half of KT’s, the FTC said in a statement last week.

In return, KT offered to give Hanaro an additional 1 percent of the fixed-line telephone market every year for the next five years. Hanaro asked for 2 percent each year at the talks, according to the statement.

Currently, KT accounts for 93.8 percent of the nation’s 21.5 million fixed-line telephone subscribers with Hanaro carving out the remaining 6.2 percent.

In response to the YMCA announcement, KT claimed the lawsuit is inappropriate because the price collusion was led by the Ministry of Information and Communication (MIC), which oversees the telecom market.

``We plan to appeal the fines because the MIC actually spearheaded the price collusion to keep then struggling Hanaro afloat and we had no choice but to follow the powerful ministry. If we win the suit against the MIC, people will understand us,’’ a KT spokesman said.

In 2002, Hanaro Telecom posted roughly 120 billion won in net loss and by the end of 2001, the latecomer to the telecom market had accumulated losses of 580 billion won due to stiff competition with the former state monopoly KT.

Hanaro Telecom also said it is not proper for civic groups to take issue with the price collusion even before the FTC sends the official text of its ruling to companies.

``We have yet to receive the official text of the FTC ruling and we will decide our position after checking it. The consumer group should have waited for the process,’’ Hanaro Vice President Doo Won-soo said.