The Russian division of LG Electronics was handed a minor fine over its activities aimed at illegally controlling the prices of its Android smartphones sold in the transcontinental country. Following months of investigation, the Federal Antimonopoly Service of the Russian Federation decided to hit the company with a fine amounting to 2.5 million rubles, or the equivalent of $40,000. FAS Deputy Head Andrey Tsarikovskiy said the penalty isn’t nearly as large as it could have been because only a “single aggravating” circumstance was discovered during the investigation, whereas the regulator also identified a number of mitigating ones.
LG evaded a more significant fine due to a number of moves, including a decision to voluntarily cease its activities aimed at affecting the prices of its smartphones sold through third parties even before FAS resolved to investigate the episode. The only aggravating circumstance identified by Russian authorities is the duration of the transgression itself, with the official estimate being that LG has been pressuring its retail partners to change the prices of its products for over a year. Coordinating reseller activities is an anti-trust violation under Russia’s anti-monopoly law which forbids companies from forcing their independent partners into selling their products at particular prices, so long as they’re paying for the inventory they’re ordering.
LG was accused of developing a robust software system for monitoring whether resellers are offerings its products at their “recommended” prices which were effectively forced on them. The South Korean original equipment manufacturer hasn’t commented on the fine in any capacity. LG’s mobile business continues to struggle on a global level and is still bleeding money, having lost more than a billion dollars in recent years, though the firm’s latest consolidated financial report showed some reasons for optimism as the tech giant adopted an even more aggressive approach to cost-cutting efforts. The South Korean OEM and many of its rivals see Russia as a major growth opportunity due to the sheer size of the transcontinental market and the fact that local competition still isn’t as strong as is the case in most other countries of that size.
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