Fair Trade Commission approves Kakao-SM ‘conditional combination’
Fair Trade Commission approves Kakao-SM ‘conditional combination’
The Fair Trade Commission conditionally approved the business combination between Kakao and SM Entertainment.

The Fair Trade Commission announced on the 2nd that it had approved Kakao and Kakao Entertainment's application for a business combination to acquire 39.87% of SM's stock, subject to the condition of imposing corrective measures.

The Fair Trade Commission judged that the combination of the two companies would substantially limit competition in the domestic pop music digital sound source market. In fact, Kakao is planning and producing digital music for its singers such as IU and Ive, and also operates Melon, the No. 1 music platform in Korea. In addition, SM Entertainment is a giant company in the digital music planning and production market, including NCT, Aespa, and Rise.

The Fair Trade Commission imposed two corrective measures. First, if Melon's competing music platform requests Kakao to supply music, it must not refuse to supply the music or stop or delay the supply without justifiable reasons.

Second, Kakao must establish an independent inspection organization to regularly check whether Melon provides preferential treatment to its company.

Kakao must adhere to the corrective action provisions for three years. However, if significant changes occur due to market conditions, the Fair Trade Commission may request cancellation or change of all or part of the corrective action.

In relation to this, Jeong Hee-eun, Director of the Corporate Transaction Combination Review Bureau of the Fair Trade Commission, said, "There are concerns about restrictions on competition, but we decided to approve it because we judged that the concerns could be resolved by imposing such behavioral measures." “I will supervise through it,” he said.

Reporter Junho Yoon, Ten Asia delo410@tenasia.co.kr translated by google