K-pop agencies' shares fall as antitrust agency launches investigation

HYBE's headquarters in Yongsan District, central Seoul [YONHAP]

Shares in K-pop powerhouses are slipping as Korea's antitrust agency launches an investigation into their gapjil, or abuse of power, over their subcontractors.

HYBE shares fell 1.92 percent to close at 280,500 won ($215), JYP Entertainment shares slipped 0.15 percent to 135,800 won and SM Entertainment shares dropped 1 percent to 108,200 won.

The Fair Trade Commission (FTC) launched an on-site investigation Tuesday into YG Entertainment in Mapo District, western Seoul, and HYBE headquarters in Yongsan District, central Seoul, to probe whether they treated their subcontractors, who produce artists' albums and merchandise, unfairly in business transactions.

The matter of unfair contracts between a label and its associated artists is not part of this investigation.

The antitrust regulator will investigate SM Entertainment, JYP Entertainment and Kakao Entertainment next week.

The working conditions for subcontractors in the entertainment industry are notoriously bad, as they frequently provide additional labor or services without payment, or see deductions in the agreed-upon price.

FTC formed an investigation team in May to probe such malpractices. The team also launched an on-site investigation to game publishers such as Krafton and Kakao Games last month.

"The content industry is in the spotlight as one of our core industries in the global economy and a critical part of our soft power, but the reality is that there are many malpractices within the industry," FTC Chairperson Han Ki-jeong said earlier this year.

"The agency will probe the relationship between companies and their subcontractors and whether companies put unjust causes in their official contract, as well as improper verbal contracts and late payments."

BY LEE JAE-LIM [lee.jaelim@joongang.co.kr]