2024-05-02 12:08:57
The government conditionally approved Kakao’s acquisition of SM Entertainment. Kakao has decided to monitor for the next three years whether it supports SM singers through the music service ‘Melon’ or, conversely, Melon does not exclude SM’s rival singers.
The Fair Trade Commission announced on the 2nd that it would approve the business combination in which Kakao (035720) and Kakao Entertainment acquired 39.87% of SM Entertainment (041510), subject to the condition of imposing corrective measures.
This business combination is a vertical enterprise in which Kakao, a leading operator in the domestic pop music digital sound source planning and production market and the No. 1 operator in the digital music distribution and platform markets, is combining with SM, the No. 1 operator in the digital sound source planning and production market. It is a combination.
Kakao plans and produces digital music for popular singers such as IU and Ive, distributes their music with those of other companies, and also operates the music platform ‘Melon’. SM is planning and producing digital music for popular singers including NCT and Aespa.
As of the time of reporting the business combination, Kakao’s share in the digital music market was △13.25% in the music planning and production market (including SM) △43.02% in the music distribution market (including SM distribution conversion) △60% based on the top 20 on the Circle Chart △ It accounts for 43.6% of the music platform market.
Jeong Hee-eun, head of the Corporate Transaction Combination Review Bureau of the Fair Trade Commission, held a briefing at the Sejong Government Complex on this day and said, “Kakao has secured SM’s powerful and popular music through this business combination, becoming the number one operator in the digital music planning and production market.” At the same time, SM “We have further strengthened our position in the music distribution market by securing distribution rights for music sources,” he analyzed.
The Fair Trade Commission observed that Kakao, which has secured SM’s digital music, is not supplying the music it distributes to Melon’s competing music platform in a timely manner, potentially limiting competition in the music platform market.
In addition, Melon judged that there was a high risk of limiting competition in the music planning, production, or distribution market by advantageously introducing or exposing music produced or distributed by Melon or its affiliates (preferential treatment).
Accordingly, the Fair Trade Commission imposed corrective measures on Kakao Entertainment, which operates Melon, for the next three years.
When Melon’s competing music platform requests Kakao to supply music, it is prohibited to refuse to supply music or to stop or delay the supply without justifiable reasons.
In addition, it was decided to establish an independent inspection organization and impose corrective measures to regularly check whether Melon provides preferential treatment to the company.
The inspection body is composed of more than five external members independent of Kakao, and will check whether the company receives preferential treatment through Melon’s latest music introduction corners, ‘Latest Music’, ‘Spotlight’, and ‘High Rising’.
Melon’s Latest Music is a permanent banner that exposes the 20 most recently released albums. Spotlight is an event banner to promote the comeback album of an established artist, and High Rising is an event banner to promote the debut album of a new artist.
Manager Jeong said, “80% of digital music sales occur within 3 months of release, so early publicity and exposure are very important for the success of digital music. Considering this, we have imposed preferential inspection measures for the latest music.” .
Kakao must comply with the Fair Trade Commission’s corrective measures for three years. However, if there is a significant change in market conditions, such as a significant decrease in concerns about competition restrictions, the Fair Trade Commission may request the cancellation or change of all or part of the corrective action.
Director Jeong explained, “This imposes a much greater obligation than the general enforcement of the Fair Trade Act,” and added, “After three years, we will return to the Fair Trade Act and supervise it.”
(Sejong = News 1)
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2024-05-02 12:08:57