HYBE listed as chaebol subject to stricter antitrust scrutiny

HYBE founder Bang Si-hyuk speaks during a forum at the Korea Press Center in Seoul in this March 2023 file photo. Yonhap

HYBE, the agency behind K-pop phenomenon BTS, has become the first entertainment company to be designated as a conglomerate subject to tighter antitrust regulations, amid its ongoing dispute with executives of its subsidiary, Ador, the agency behind girl band NewJeans, according to the Fair Trade Commission (FTC), Wednesday.As a result, HYBE founder Bang Si-hyuk, the company’s largest shareholder with a 31.8 percent stake, has come under the antitrust agency’s scrutiny regarding possible unfair transactions with affiliates under the control of his family members.The company has also been forced to disclose all of its large-scale intra-affiliate transactions.Under Korean law, conglomerates with assets of 5 trillion won ($3.65 billion) or larger are designated as “large corporations” required to disclose details on their intra-affiliate transactions, their ownership structure and key information about their unlisted affiliates.Since HYBE was listed on the stock market in 2020, the firm has only had to disclose its own business reports and balance sheets, in compliance with the Commercial Act and the Capital Markets Act.

However, it now needs to disclose important information about its unlisted affiliates as well.The FTC attributed HYBE’s designation as a large corporation to the Korean entertainment industry’s rapid growth following the global popularity of K-pop artists.“HYBE’s designation led us to thoroughly monitor its intra-affiliate transactions,” an FTC official told reporters.Among the 88 business groups designated as large corporations this year, HYBE was ranked 85th in terms of the size of assets. As it has 5.25 trillion won in assets, the company will stay on the list of large corporations, regardless of its divestment from Ador, which has 61.6 billion won in assets.In addition to Ador, HYBE oversees at least 11 labels including Belift Lab, Source Music, Pledis Entertainment and KOZ Entertainment, as it adopted the multi-label system. If HYBE mistakenly or intentionally omits information about any of its affiliates from its regulatory filing, Bang will be issued a warning by the antitrust watchdog, which may lead to 슬롯게이밍 prosecution.

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