24July2013[KFTC Press Release] Imposing sanctions on Interference in JYJ’s Entertainment Activities

Full Translation

[KFTC Press Release]
Imposing sanctions on Interference in JYJ’s Entertainment Activities
– Fair Trade Commissions Korea Gives Correction Order against SM and KFPCAI’s interferences in JYJ

(1) Fair Trade Commissions Korea (Chairman: Dae Rae RHO) gives correction order to SM Entertainment (hereinafter referred as ‘SM’) and Korean Federation of Pop Culture and Art Industry (hereinafter referred as ‘KFPCAI’) that interfered in the idol group JYJ’s TV appearances and activities as a singer.

– In June 2009, a legal dispute [between JYJ and SM] occurred when the three members of TVXQ (SM artist) raised an objection against the unfairness of their exclusive contract.

– In October 2010 when JYJ tried to resume its activities as a singer with its first album, SM and KFPCAI disturbed the group’s entertainment activities by sending an official document asking restraints on JYJ’s TV casting and appearances to the persons related in the industry after they made agreement on this interference.

– SM and KFPAIC’s agreement to restrain JYJ’s TV casting, appearances, album distribution and other activities were advised 26 companies such as broadcasters, album distributors, MP3 distributors and others by the official document under the name of KFPCAI.

* JYJ: The group formed by the three members(Jaejoong KIM, Yuchun PARK and Junsu KIM) of the male-quintet idol group TVXQ (debuted on Jan 2004) after they left SM.

* SM: One of the top-3 entertainment management company in Korea. Sales 168.5 billion KRW / net profit 37.1 billion KRW in 2012 /Market share in album distribution: 30.3%(1st), MP3: 4.3% (6th) / managing artists – SNSD, Super Junior, SHINee, f(x), TVXQ and others.

* KFPCAI: Formed in July 2009. Aims to contribute improvement of Korean Pop culture and consisted of 12 related organisations such as KEPA (Korea Entertainment Producers Association) and CODATV (Corea Drama Production Association). SM is the organising body of KEPA.

<Background Acknowledgement>

1. JYJ applied for the injunction to invalidate the exclusive contract made with SM (31st July, 2009).

– (27th October, 2009) The court accepted the above injunction with its order that: 1) SM cannot make any contracts on behalf of JYJ 2) SM cannot raise objection or request cancelation against JYJ’s entertainment activities.

– (On 29th October, 2009) After the above ruling of the court, SM hold a press conference and criticised JYJ by calling the dispute as ‘national fraud’.

2. SM(April 2010), JYJ (June 2010) filed the lawsuits against each other regarding validity/invalidity of the exclusive, but the disputes were finished on 28th November, 2012 by the both sides’ agreement under arbitration.

– During this period, SM sent an official document to Warner Music Korea, the distributor of JYJ’s first album, requesting Warner Music to stop JYJ’s album release on 2nd October, 2010. It also applied for an injunction for prohibition of the album sales in October, 2012.

– After the above incident, JYJ applied for indirect order to the court against SM’s interference on 9th December, 2010 and the court also accepted this on 29th February, 2011.
(The court acknowledged that SM was ‘likely’ to violate its duty to not interfere in JYJ’s activities by considering the official document and press conference done by SM)

<Violation and Effect caused>

1. SM and KFPCAI agreed to disturb JYJ’s activities to maintain the industry’s order because the group raised a dispute against its management company.

 – (11th October, 2010) KFPCAI sent the official document to 26 related companies in music/broadcasting industry, asking not to make JYJ’s TV appearance/cast, distribute JYJ’s albums and MP3s.
(26 related companies are – Warner Music Korea, 3 Major broadcasting companies, 6 Music/Entertainment Cable Broadcasting companies, 11 album whole/retail companies and 5 on-line music services companies)

– The official document contained SM’s unconfirmed unilateral insists that: ‘injunction was only for money’, ‘duel contract with other management’ and others.
* (On 7th October, 2010) SM filed an injunction against JYJ, insisting JYJ made duel-contract with C-JeS Entertainment, but it was rejected by the court.

– Especially the document stated that JYJ’s appearances and album distribution would not only cause legal problems but also cause regression of pop culture and Korean Wave.

– Considering the fact that SM has certain influence as the one of the TOP-3 management and  KFPCAI is consisted of various associations of the industry, this document gave significant pressure to the companies interested.

2. After this, JYJ has had limited activities as a singer in Korea – not been able to appear on music/entertainment programmes.
(Considered Cases are – many cancellations of music/entertainment programmes’ cast/appearance, postponement of its songs on music charts, cancellation of film screening and many others)

– It is acknowledged that visual promotion via TV to the public is importance to JYJ as it is an idol group with dance music in general.

<JYJ’s album sales and ranking>


Main songs are: OST – ‘Found You’, 1st album – ‘Ayyy Girl’, 2nd album – ‘In Heaven’, ‘Get Out’

– JYJ’s activities have been focused on Dramas, Musicals, Commercials and overseas activities which SM has less influence.

<Action on the above issue>
: Correction Order (including notice of correction order)

– KFTC prohibited SM and KFPCAI from improper action on JYJ

– KFTC ordered KFPCAI to advise the 26 companies which received its official document about the fact that it received correction order from KFTC.

*Article applied for the order:

1) SM – Monopoly Regulation and Fair Trade Act, Item 5 of Para. 1. Article 23 (Interference in business act)

2) KFPCAI – Monopoly Regulation and Fair Trade Act, Item 4 of Para. 1. Article 26 (Prohibited act of association)

* The court ordered indirect order which it can claim compensation for damages in case such interference occurs because it acknowledged SM would be ‘likely to’ interfere JYJ’s activities. However, KFTC decided that SM DIRECTLY involved in interference in JYJ’s activities as a singer therefore gave prohibition order.

<Significance and expected effect>
This order has significant meaning as KFTC prohibited the big management company from disturbing the artist who is having disputes against it by abusing its influence with other business association.

There have been a lot of social issues raised regarding unfair contracts and practices in entertainment industry, however, many business actions are still being done by mainly management companies’ wills regardless of artists’ will or public demands.
(During the investigation period, KFTC received many petitions from fans and others demanding JYJ’s TV appearances.)

KFTC expects that this order would be served as a warning to similar case of unfair actions which could be occurred in entertainment industry.


Source: Korea Fair Trade Commission

Translated by: dedicatee.wordpress.com

Shared by ParkYoochunSGFC

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