The fierce battle between music giant HYBE and South Korean conglomerate Kakao for control of K-pop agency SM Entertainment, with Kakao winning, has become one of the most vivid music business stories of 2023.
Now, South Korean regulators have given the Kakao acquisition a conditional green light and are currently investigating at least one Kakao executive for alleged stock price manipulation that may have affected the outcome of the corporate fight.
The Korea Fair Trade Commission (KFTC) has approved Kakao’s ownership of SM Entertainment, but has imposed a number of conditions on the acquisition, including Kakao’s music streaming service, melonwas asked to distribute music from record labels and publishers competing with SM Entertainment.
“To address concerns about restrictions on competition in the digital music market, the Fair Trade Commission first banned Melon’s competing music platform request Kakao,” KFTC said in a statement released on Thursday (May 2).
The KFTC also ordered the establishment of an “independent inspection agency” to monitor Melon’s anti-competitive behavior.
The regulator said it was the first time such “corrective measures” had been taken to prevent preferential treatment by digital platforms and the first time such measures had been taken by the entertainment industry.
Melon is the most popular music streaming service in South Korea. 28 million Users, according to KFTC, it has 43.6% Share of the music streaming market.
SM Entertainment is generally considered the second largest K-pop music company, behind HYBE.His more popular performances include Espa, EXO, Girls’ Generation, red velvetand super boy.
The KFTC said it had determined that the collaboration between Kakao and SM could result in “significant restrictions on competition.”
Kakao will be required to comply with the KFTC’s conditions for three years, but can apply to the regulator to change or cancel the conditions if “there are significant changes in market conditions.”
After months of corporate battles with HYBE, Kakao won actual control of SM Entertainment in March 2023, acquiring 39.9% Shares in publicly traded companies.
However, it turns out that’s not the end of the story. Allegations soon emerged that Kakao may have manipulated stock prices during the battle for control, leading South Korean regulators to raid SM’s offices in April 2023.
Six months later, Kakao Chief Investment Officer, Bae Jae HyunHe was arrested and Seoul prosecutors charged him with violating capital markets laws.
Prosecutors said Bae tried to manipulate SM’s stock price to prevent HYBE from taking control of the company, spending the equivalent of $181 million A series of high-priced stock acquisitions attempted to push up SM’s share price.
SM stock price surges to record high, HYBE withdraws from bidding war for the company, Burundi reported.
Kakao’s lawyers claimed last fall that the company’s acquisition of SM remained legal and that no harm was caused to HYBE or SM shareholders.
The investigation thereafter focused on the role, if any, of Kakao’s founders Kim Bum-soo Suspected of manipulation.
according to a report korea timesProsecutors said last month it was “necessary” to question King as part of the investigation, but did not provide any information on when that would happen.global music business
