K-pop boy band EXO’s Baekhyun, Xiumin and Chen have filed a complaint against SM Entertainment, their agency, for abuse of its dominant position and “slave contracts,” showing their determination to end their relationship with the company.
Baekhyun, Xiumin and Chen, who also belong to the subunit EXO-CBX, earlier notified SM Entertainment that they are terminating their exclusive contracts due to unfair long-term periods and for failure of the company to provide them copies of the financial settlements.
(From left) EXO's Baekhyun, Xiumin and Chen (Twitter)
The three K-pop stars, through their lawyer, filed a complaint against SM Entertainment with the Fair Trade Commission (FTC), Korea’s “ministerial-level central administrative organization under the authority of the Prime Minister and also functions as a quasi-judicial body.”
“The KFTC formulates and administers competition policies, and deliberates, decides, and handles antitrust cases. The KFTC performs our roles and duties independently without any intervention from an outside organization,” according to the KFTC website. “The KFTC is committed to four main mandates: promoting competition, strengthening consumers' rights, creating a competitive environment for SMEs and restraining concentration of economic power.”
Lawyer Lee Jae-hak, a member of the Lin law firm who is representing the three stars, issued a press statement to Korean media on June 5.
He said they filed a complaint on June 4 with the FTC against SM Entertainment for abuse of trading position.
This falls under Article 23 (Prohibition on Unfair Trade Practices) of Korea’s Monopoly Regulation And Fair Trade Act, which states that “no business entity shall do any of the following acts that are likely to hinder fair trade (hereinafter referred to as "unfair trade practices"), or require its affiliates or other business entities to do such act” by “making a transaction with a certain transaction partner unfairly taking advantage of its bargaining position.”
According to the lawyer, the FTC already issued corrective orders against SM Entertainment in 2007 and 2011 regarding the long-term contracts but the company continued with this.
In 2008, three members of K-pop boy band TVXQ-Yoochun, Junsu and Jaejoong–filed a complaint against SM Entertainment for the “slave contracts.”
The EXO-CBX’s lawyer said that in addition, they are requesting the FTC a thorough investigation into alleged SM Entertainment violations regarding exclusive contracts of stars belonging to the agency.
Lee Jae-hak said Baekhyun, Xiumin and Chen entered into unfair contracts with SM Entertainment as these did not reflect the corrective measures that were ordered by the FTC in the past.
He said calculating the end date of the exclusive contract from “the time of debut in entertainment activities” (not from the date of the exclusive contract signing) is an ultra-long-term exclusive contract that is determined by the agency's discretion.
According to the lawyer, after SM received the correction order from the FTC in 2007, the exclusive contracts signed in 2010 and 2011 by Baekhyun, Xiumin and Chen presented exactly the same unfair clauses.
He said in the 2007 FTC resolution, it was already judged that the contract period of five years from the debut date (not from the date of the contract signing) was excessively long.
In response to the claims by the three EXO members, SM Entertainment changed its position but with a condition.
SM Entertainment, in a statement, said they have decided to provide a copy of the settlement data to the three under the premise that they and their agents will not use it for unfair purposes.other than checking the details.
However, SM Entertainment rejected the three stars’ move to terminate their exclusive contracts.
“However, we would like to make it clear that the contract cannot be terminated simply by unilateral notification that lacks grounds,” it said.