Major digital music suppliers fined 18.8 bln won for price rigging

South Korea's antitrust watchdog said Tuesday that it has slapped major digital music providers with a combined 18.8 billion won (US$16.6 million) in fines for rigging prices of digital music content and online download services.

Loen Entertainment and Mnet Media were fined 9.58 billion won and 1.98 billion won, respectively, while SK Telecom Co. and KT Corp., the nation's two leading mobile service providers and online music site operators, were slapped with 1.96 billion won and 811 million won fines, according to the Fair Trade Commission.

Those companies were found to have colluded to fix prices of their download services for DRM-based music files. DRM refers to the Digital Rights Management technology designed to prevent downloaded music files from being freely copied or moved to unauthorized devices.

The technology was viewed as a major tool to curb the unauthorized spread of copyrighted content, such as music and movies on the Internet, but the government allowed for the sales of non-DRM files as well on online music sites in 2008 amid growing concerns over its excessive restraint on even legally purchased digital content.

Since then, those companies had engaged in fixing prices of existing download services for their DRM-based files, while covertly cooperating in designing downward services for such digital content, the watchdog said.

Their collaboration was intended to protect their profit base at a time when Soribada, a minor digital music file provider, launched cheaper download services for non-DRM files, possibly eroding their market status in a sharply changing competition environment.

In this process, such music file retailers as Sony Music Entertainment Korea, Universal Music and Warner Music were also found to have been involved in rigging prices of their digital content, the watchdog said.

The FTC said that such collaborations in pricing and service hampered fair market competition and increased the price burden on customers -- mostly those in their 20s and 30s who prefer downloading music files to purchasing CDs.

(Yonhap News)