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| 카카오엔터테인먼트 (사진=연합뉴스) |
[Alpha Biz=(Chicago) Reporter Kim Jisun] The Fair Trade Commission has begun screening Kakao and SM Entertainment (SM) regarding their business combination.
Kakao and Kakao Entertainment became the largest shareholders by securing 39.87% (20.76% and 19.11%, respectively) of SM shares by the 28th of last month through public purchase.
The FTC believes that the combination of the two companies will result in horizontal, vertical and mixed combinations. Horizontal combination refers to the combination of a rival company, and vertical combination refers to the integration of companies that engage in businesses such as production or distribution in the same industry.
For example, SM, which is in the field of singer management, and Starship Entertainment of Kakao are combined horizontally. When SM's music production and record production are combined with Kakao's music streaming service Melon (distribution), it is a vertical combination.
The mixed combination, excluding horizontal and vertical combinations, means the combination of SM entertainers as characters in webtoon business sectors such as Kakao Webtoon and Kakao Page. Producing and distributing Kakao emoticon products using SM celebrities is also a mixed combination.
The FTC is expected to closely examine concerns over competition restrictions under the Fair Trade Act, as the combination of Kakao and SM is expected to have a significant impact on the entertainment industry as a whole.
The FTC's corporate combination review period is usually 30 days, which can be extended to 90 days if necessary. The period for the FTC to request the necessary data for the review is not included in the review period, so the actual review may continue for more than six months.
AlphaBIZ 김지선(stockmk2020@alphabiz.co.kr)
