Kakao’s move to gain controlling stake in SM Entertainment approved

Featured Image: Wendy Wei

Internet conglomerate Kakao has been offered conditional approval from South Korea’s antitrust regulator to acquire a controlling stake in K-pop agency SM Entertainment.

Kakao and its subsidiary Kakao Entertainment made its intentions known to increase its ownership to 39.87% just over a year ago. 

The Korea Herald reported that South Korea’s Fair Trade Commission (FTC) approved the deal, but placed two conditional measures to address any concerns. As per reports, Kakao is unable to refuse or delay music supply requests from its competitors without reasonable grounds, and also must establish an independent body to monitor the company’s potential favouritism towards its own streaming platform. 

Kakao originally purchased the extra shares of SM Entertainment in March last year, after music label Hybe – which manages K-pop stars BTS – agreed to sell its entire stake in the agency.

The FTC said, as per The Korea Herald: “It is the first case that the FTC ordered corrective measures as conditions for a corporate merger in the entertainment field. We will continue thoroughly review corporate merger cases to ensure fair competition and to prevent damage to customers.”

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