Members of K-pop group EXO file anti-trust complaint against SM Entertainment

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Three members of K-pop group EXO have filed an antitrust complaint against their label, SM Entertainment, amid an ongoing war of words between the artists and the agency about the legitimacy of their contracts.

The lawyer representing Baehkyun, Xiumin and Chen – three of the nine members of EXO – announced in a statement to media on Monday (June 5) that he had filed a “complaint of abuse” with South Korea’s Fair Trade Commission.

“In addition, we requested [that] the Fair Trade Commission conduct a strict investigation into SM Entertainment’s violations and prompt corrective measures to rectify them, and furthermore, we requested a full investigation into the exclusive contracts of celebrities belonging to SM Entertainment,” attorney Lee Jae-hak of law firm LIN said in a statement, as quoted by Korean newspaper Kyunghyang Shinmun.

At the heart of the dispute are the contracts that Bakhyun, Xiumin and Chen – whose real names are Byun Baekhyun, Kim Minseok and Kim Jongdae, respectively – signed with SM Entertainment in 2011 and 2012, and which were extended in December of 2022, to a total length of 17 or 18 years.

In a statement released through their lawyer last Thursday (June 1), the three EXO members announced they were terminating their contracts with SM on the grounds that the contracts were “unfair” and far exceeded the standard seven years that FTC guidelines recommend for long-term artists’ contracts; and that they had lost faith in SM after they were denied repeated requests for settlement reports – detailed breakdowns of payments made by SM to the artists.

The trio said in the statement that “legal action is inevitable” under the circumstances.

That statement triggered a back-and-forth between SM Entertainment and the EXO members’ lawyer that has continued for the past several days.

SM replied that it was given “tip-offs” that another business was trying to poach the EXO members, and that the trio may have signed a contract with this third party, in violation of their exclusive contracts with SM.

In a statement released last week, SM said that the EXO members, along with other artists, have always been able to visit the SM offices to view their settlement reports, but the company would not provide the artists with copies because they could be “unfairly provided to a third party.”

In a later statement, issued on Monday (June 5), the company said it would provide the settlement reports to the three EXO members.

“After careful consideration, we decided to provide the copies on the condition that the three and their agents do not use them for any unfair purpose other than checking the content,” the company said, as quoted by Yonhap news agency. “We also explained this situation to other EXO members and asked for their consent or understanding.”

In a statement issued last Friday (June 2), the lawyer for the EXO members refuted SM’s claims that another agency was involved in the conflict.

“Our artists are clearly human beings who can make decisions for themselves and take action for themselves,” the statement said, as quoted by Korean pop culture site Soompi.

“The decision to [exercise] their rights, such as requesting settlement data, was made by themselves after long deliberation and deep thought, and it is definitely not due to the intervention of an external influence.”

‘An ‘external force’?

In a response to that statement, published by Korea’s Star News, SM Entertainment noted that “the representatives of the three artists have made it clear to the press, not to the company, that there is no third party involvement in the actions of the three.”

The company added: “Internally, there are high voices of concern about whether the agents of the three artists can be trusted and whether there is no third party involvement despite numerous reports and circumstances.”

The company also stated that the EXO members can’t terminate their contracts “simply by [a] unilateral notification that lacks grounds.”

According to Star News, SM issued a follow-up statement that “it has been confirmed that [there is] an external force approaching our artist[s] with the purpose of instigating conflict between the company and the artist to disintegrate the existing team.” SM reportedly identified K-pop label Big Planet Made as that “external force.”

Big Planet Made, or BPM Entertainment, had earlier denied any involvement in the conflict, and threatened legal action against SM if it persisted in linking the agency to its problems with the EXO members.

In his statement announcing the antitrust complaint, lawyer LIN law firm’s Lee stated that the FTC had twice before ruled against SM’s lengthy contracts, in 2007 and 2011.

Despite this, SM “did not rectify” its existing contracts, Lee’s statement said.

In a separate statement refuting SM’s latest claims, the three EXO members said alleged were pressured into signing their contract renewals in December of last year. Some of the members were told that if they didn’t sign, it would harm other members of the K-pop group.

It was “strange that our contract renewals were rushed and carried out suddenly around a year before the contract renewal period,” they said in the statement.

“After completing contracts with us in a flash… news arose regarding a takeover battle surrounding SM. We couldn’t help but question, ‘Ah, is that why our contracts with nearly a year left were moved up and signed?’”

That “takeover battle surrounding SM” involved Korean tech and media giant Kakao and rival K-pop agency HYBE, which both vied for control of SM Entertainment earlier this year. Kakao emerged the winner in that battle, taking control of 39.9% of SM’s shares.

However, that battle has led to problems for Kakao, which is suspected by Korea’s financial regulator of having manipulated SM’s stock price during its efforts to take control of the company.

In April, the regulator raided the offices of SM Entertainment as part of its probe into the potential stock price manipulation.

SM is the second-largest K-pop label by revenue, second only to its rival HYBE, which represents BTS, considered to be the world’s largest K-pop band. Besides EXO, SM Entertainment also represents K-pop acts TVXQ, Girls’ Generation, Super Junior and aespa.Music Business Worldwide

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