Photo Credit: Korea Fair Trade Commission by Minseong Kim / CC by 4.0
South Korea’s Fair Trade Commission reaches an agreement with major K-pop agencies over subcontractor violations.
Today, the Korean Fair Trade Commission (KFTC) has announced the finalization and implementation of a consent decree with five major entertainment companies—Hybe, SM Entertainment, YG Entertainment, JYP Entertainment, and Starship Entertainment—over their violations of the country’s subcontracting act.
The investigation began in July 2023, and found that these companies failed to issue written contracts in advance or issued them late for services like album, merch, and video content production, as well as performance-related work.
To resolve the matter, the five companies applied for a consent decree between April and May 2024, proposing self-correction measures. The KFTC accepted the initiation of the consent decree process on December 2, 2024. Following a period of public comment between February 4 to March 21 this year, the final consent decree was approved on June 9.
Key provisions of the consent decree include:
Improving Transaction Practices:
- Developing and distributing standard and provisional contract templates
- Introducing electronic contract systems and improving internal contract management systems
- Publishing subcontracting transaction guidelines on their websites and providing them to subcontractors
Preventing Recurrence:
- Providing mandatory subcontracting law education for employees
Supporting Subcontractors:
- Contributing a total of 1 billion KRW ($736 million)—200 million KRW ($147 million) per company—to support subcontractors, including providing safety equipment, filming equipment, health check-up subsidies, and legal/accounting consulting.
The KFTC believes this consent decree will help establish fair and “win-win” subcontracting practices in the entertainment industry. It also believes this will protect small and medium-sized enterprises that often face unstable transaction relationships due to the fluid nature of the industry.
Notably, this is the first application of the consent decree system in the manufacturing and service subcontracting sectors since its introduction to the South Korean subcontracting act in July 2022. The trade agency says it will continue to monitor the entertainment companies’ compliance with the decree.
Content shared from www.digitalmusicnews.com.