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Entertainment firms hit for bad contracts

July 29,2002
The Fair Trade Commission ruled that SM Entertainment had abused its overwhelming negotiating power and left entertainers with little choice but to accept contract terms that were detrimental to their financial interests.

SM was among the 28 entertainment agencies and 7 industry associations that were found to have engaged in anti-competitive activities, the commission announced Sunday.

SM was found to have signed a contract with a former member of a popular musical group that called for exorbitant damage payments if the entertainer broke the contract. The damage was set at five times the amount of the contract, five times SM's investment, three times the expected future profit for the company and an additional 100 million won.

SM is among the agencies currently under investigation by the prosecution for allegedly paying off broadcasting officials in return for more favorable airtime for its musicians.

Another agency, MTM Communication, was charged for taking 50 percent of the fees its actors earned from appearing on television programs. The average commission for an agent is 30 percent.

Eighteen production companies were ordered to change contracts that shielded the firms from liability if the filming of a movie they were producing was stopped by the firms' action.

The antitrust commission fined SM, 8 record labels and a music album distribution company established by them 994 million won ($835,000).

by Lee Soo-ho




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