[Alpha Biz= Reporter Paul Lee] Kakao's acquisition of SM Entertainment has been approved by the authorities after more than a year, with the condition that Kakao, through its music streaming service Melon, does not unfairly promote SM artists or discriminate against competing artists. The Fair Trade Commission announced on the 2nd that it has decided to approve the merger with Kakao and Kakao Entertainment, which acquired 39.87% of SM Entertainment's shares, imposing corrective measures.
Kakao operates the music platform Melon and also plans and produces digital music for popular artists such as IU and IVE, while SM Entertainment plans and produces digital music for artists like NCT and aespa.
The Fair Trade Commission has determined that there is a significant concern that Kakao, after securing SM's digital music through the merger, may restrict competition by not supplying its music to Melon's competing platforms or by favorably featuring its music on Melon.
To address these concerns, the FTC has imposed corrective measures requiring Kakao not to unreasonably refuse or delay the supply of its music to competing platforms upon request, and to establish an independent monitoring body to regularly check whether it gives preferential treatment to its music.
With this merger, Kakao has become the leading player in the digital music planning and production market, securing popular songs from SM Entertainment.
After the merger, Kakao's market share in the digital music market rose to 13.25% in the music planning and production market, 43.02% in the music distribution market, and 43.6% in the music platform market, based on the market share at the time of the merger filing.
Alphabiz Reporter Kim SangJin(hoondork1977@alphabiz.co.kr)
