[KFTC Press Release] Imposing sanctions on Interference in JYJ’s Entertainment Activities

Full Translation

[KFTC Press Release]
Imposing sanctions on Interference in JYJ’s Entertainment Activities
– Fair Trade Commissions Korea Gives Correction Order against SM and KFPCAI’s interferences in JYJ

Original: KFTC’s official press release http://bit.ly/163wHzR

(1) Fair Trade Commissions Korea (Chairman: Dae Rae RHO) gives correction order to SM Entertainment (hereinafter referred as ‘SM’) and Korean Federation of Pop Culture and Art Industry (hereinafter referred as ‘KFPCAI’) that interfered in the idol group JYJ’s TV appearances and activities as a singer.

– In June 2009, a legal dispute [between JYJ and SM] occurred when the three members of TVXQ (SM artist) raised an objection against the unfairness of their exclusive contract.

– In October 2010 when JYJ tried to resume its activities as a singer with its first album, SM and KFPCAI disturbed the group’s entertainment activities by sending an official document asking restraints on JYJ’s TV casting and appearances to the persons related in the industry after they made agreement on this interference.

– SM and KFPAIC’s agreement to restrain JYJ’s TV casting, appearances, album distribution and other activities were advised to 26 companies such as broadcasters, album distributors, MP3 distributors and others by the official document under the name of KFPCAI.

* JYJ: The group formed by the three members(Jaejoong KIM, Yuchun PARK and Junsu KIM) of the male-quintet idol group TVXQ (debuted on Jan 2004) after they left SM.

* SM: One of the top-3 entertainment management company in Korea. Sales 168.5 billion KRW / net profit 37.1 billion KRW in 2012 /Market share in album distribution: 30.3%(1st), MP3: 4.3% (6th) / managing artists – SNSD, Super Junior, SHINee, f(x), TVXQ and others.

* KFPCAI: Formed in July 2009. Aims to contribute improvement of Korean Pop culture and consisted of 12 related organisations such as KEPA (Korea Entertainment Producers Association) and CODATV (Corea Drama Production Association). SM is the organising body of KEPA.

<Background Acknowledgement>

1. JYJ applied for the injunction to invalidate the exclusive contract made with SM (31st July, 2009).

– (27th October, 2009) The court accepted the above injunction with its order that: 1) SM cannot make any contracts on behalf of JYJ 2) SM cannot raise objection or request cancellation against JYJ’s entertainment activities.

– (On 29th October, 2009) After the above ruling of the court, SM hold a press conference and criticised JYJ by calling the dispute as ‘national fraud’.

2. SM(April 2010), JYJ (June 2010) filed the lawsuits against each other regarding validity/invalidity of the exclusive, but the disputes were finished on 28th November, 2012 by the both sides’ agreement under arbitration.

– During this period, SM sent an official document to Warner Music Korea, the distributor of JYJ’s first album, requesting Warner Music to stop JYJ’s album release on 2nd October, 2010. It also applied for an injunction for prohibition of the album sales in October, 2012.

– After the above incident, JYJ applied for indirect order to the court against SM’s interference on 9th December, 2010 and the court also accepted this on 29th February, 2011.
(The court acknowledged that SM was ‘likely’ to violate its duty to not interfere in JYJ’s activities by considering the official document and press conference done by SM)

<Violation and Effect caused>

1. SM and KFPCAI agreed to disturb JYJ’s activities to maintain the industry’s order because the group raised a dispute against its management company.

 – (11th October, 2010) KFPCAI sent the official document to 26 related companies in music/broadcasting industry, asking not to make JYJ’s TV appearance/cast, distribute JYJ’s albums and MP3s.
(26 related companies are – Warner Music Korea, 3 Major broadcasting companies, 6 Music/Entertainment Cable Broadcasting companies, 11 album whole/retail companies and 5 on-line music services companies)

– The official document contained SM’s unconfirmed unilateral insists that: ‘injunction was only for money’, ‘duel contract with other management’ and others.
* (On 7th October, 2010) SM filed an injunction against JYJ, insisting JYJ made duel-contract with C-JeS Entertainment, but it was rejected by the court.

– Especially the document stated that JYJ’s appearances and album distribution would not only cause legal problems but also cause regression of pop culture and Korean Wave.

– Considering the fact that SM has certain influence as the one of the TOP-3 management and  KFPCAI is consisted of various associations of the industry, this document gave significant pressure to the companies interested.

2. After this, JYJ has had limited activities as a singer in Korea – not been able to appear on music/entertainment programmes.
(Considered Cases are – many cancellations of music/entertainment programmes’ cast/appearance, postponement of its songs on music charts, cancellation of film screening and many others)

– It is acknowledged that visual promotion via TV to the public is importance to JYJ as it is an idol group with dance music in general.

<JYJ’s album sales and ranking>




1st album (The Beginning)

2nd album (In Heaven)
































Main songs are: OST – ‘Found You’, 1st album – ‘Ayyy Girl’, 2nd album – ‘In Heaven’, ‘Get Out’

– JYJ’s activities have been focused on Dramas, Musicals, Commercials and overseas activities which SM has less influence.

<Action on the above issue>
: Correction Order (including notice of correction order)

– KFTC prohibited SM and KFPCAI from improper action on JYJ

– KFTC ordered KFPCAI to advise the 26 companies which received its official document about the fact that it received correction order from KFTC.

*Article applied for the order:

1) SM – Monopoly Regulation and Fair Trade Act, Item 5 of Para. 1. Article 23 (Interference in business act)

2) KFPCAI – Monopoly Regulation and Fair Trade Act, Item 4 of Para. 1. Article 26 (Prohibited act of association)

* The court ordered indirect order which it can claim compensation for damages in case such interference occurs because it acknowledged SM would be ‘likely to’ interfere JYJ’s activities. However, KFTC decided that SM DIRECTLY involved in interference in JYJ’s activities as a singer therefore gave prohibition order.

<Significance and expected effect>
This order has significant meaning as KFTC prohibited the big management company from disturbing the artist who is having disputes against it by abusing its influence with other business association.

There have been a lot of social issues raised regarding unfair contracts and practices in entertainment industry, however, many business actions are still being done by mainly management companies’ wills regardless of artists’ will or public demands.
(During the investigation period, KFTC received many petitions from fans and others demanding JYJ’s TV appearances.)

KFTC expects that this order would be served as a warning to similar case of unfair actions which could be occurred in entertainment industry.

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[NEWS] Dispute finally ended – makes 0% possibility for TVXQ to be Five

Dispute finally ended – makes 0% possibility for TVXQ to be Five

The dispute regarding exclusive contract between SM Entertainment and JYJ (Jaejoong/Yucjun/Junsu) has been completed by the both parties’ agreement. This made the dispute dragged for 3 years and 4 month finally finished.

According to legal circles on 28th, SM Entertainment and JYJ agreed to finish all contracts made between the both parties as of July 31st, 2009, the date of application for injunction. Also they made agreement to withdraw all lawsuits related and would not interfere in each other’s activities. Therefore, JYJ and 2 members of TVXQ now go separate way.

TVXQ has been doing its activities as 2 members – Yunho and Changmin, and Jaejoong Kim/ Yuchun Park/ Junsu Kim have been doing both individual activities in acting career and activities as the group JYJ. It is now the 3rd year of JYJ which was formed in SEP 2010, and the both TVXQ and JYJ are having a lot of popularity in domestic and abroad.

As the conflict is completed by agreement, now there is almost zero percentage for TVXQ to be 5 members in a matter of fact. Also the both sides have already made their own ways, so it is expected that there would not be any big changes of their activities. TV2XQ and JYJ are now able to have their activities independently freed from dispute.

Jaejoong Kim, Yuchun Park and Junsu Kim made their first debut as members of TVXQ in 2004, and applied for an injunction to terminate validity of exclusive contract against SM Entertainment, the former management company, in July 31st, 2009.


+) Also JYJ’s names will be removed from the list of SM artists on its financial report for stock market from this 4th quarter as now the three members of JYJ are neither TVXQ, nor SM singers any more after all contracts has become invalid. (SM has included JYJ’s names on the name of the members of TVXQ insisting they were still SM singers as the exclusive contract was valid.)

Now the past becomes ‘real’ past, so congratulations on being freed from the contract of SM!

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[NEWS] JYJ “We’ll walk the way that only JYJ can do” C-JeS comments on completion of the lawsuit

JYJ “We’ll walk the way that only JYJ can do”
C-JeS comments on completion of the lawsuit

NOV 28, 2012

Original Link: http://osen.mt.co.kr/article/G1109506440


The dispute between JYJ(Jaejoong Kim, Yuchun Park and Junsu Kim) and SM Entertainment has been dramatically completed by the both parties’ agreement.

C-JeS Entertainment, the management company of JYJ, released official press release through Se Jong Law Firm, the legal representative. On the press release of Se Jong Law Firm, it expressed that “the injunction JYJ filed against the former management company(SM) made monumental rulings clarifying that unfair contracts abusing the weak party’s position are invalid twice, while it was drawing such public attention”, as the background of the lawsuit.

It continued, “The previous rulings made that entertainment industry’s unfair practices wiped away and accelerated opportunities to be significantly improved. With the ruling from the lawsuit, 1) legal practices were improved in order to protect new artists, 2) the parties involved in entertainment industry became aware of the problems so that the new artists can have their activities with more freedom. We hope this broad view of agreement can help JYJ to improve even more, with the both parties mutual cooperation”.

JYJ filed an injunction to clarify invalidity of exclusive contract in 2009, and the court accepted this so that JYJ could have independent activities. After this, SM filed the lawsuit to clarify validity of exclusive contract and claimed compensation for damage in APR 2010, and JYJ also filed the lawsuit to clarify invalidity of exclusive contract against this. However, the court favored in JYJ’s side after rejected SM’s objection against JYJ’s injunction and ordered indirect order to pay for its interferences in JYJ’s activities.

Chang-Joo Back, CEO of C-JeS Entertainment, added that “We always thought that this was a winning game since the court accepted JYJ’s injunction[in 2009]. The current disturbance happening to JYJ’s activities are not about legal disputes, but being a David and Goliath contest, therefore, we do not think that our plans will be dramatically changed after the ruling”.

He continued, “We are walking the path that only JYJ can do and also will continue as we planed in the future. We hope that this agreement would make improvement for some cases which were regulated by way of making excuse from the lawsuit. Also we would like to express our sincere appreciation for fans in Korea and abroad, who send everlasting support for JYJ so far”.

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[NEWS] JYJ Finishes legal dispute with SM – “Won’t disturb each other’s activities”

JYJ Finishes legal dispute with SM – “Won’t disturb each other’s activities”

NOV 28, 2012

Original Link: http://news.nate.com/view/20121128n12127

The group JYJ (Jaejoong Kim, Yuchun Park and Junsu Kim) has got free from SM Entertainment.

The dispute between SM Entertainment and JYJ has been completed based on mutual agreement , 3 years and 4 months later since it started.

According to legal circles, SM Entertainment and the three members of JYJ agreed to finish their all contracts based on the date of July 31st, 2009. Also the both parties made written agreement containing that 1) the both would cancel all lawsuit filed against each other, 2) will not disturb any activities against each other.

Jaejoong, Yuchun and Junsu who debuted as the group TVXQ in 2004, filed a lawsuit to clarify invalidity of exclusive contract on July 31st 2009 and have had their activities as JYJ since Sep, 2010.

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SM Strikes into Earning Shock leading to fall – Analysts in panic

SM Strikes into Earning Shock leading to fall – Analysts in panic

Nov 14, 2012


SM Entertainment (CODE 041510) showed earning shock [economic performance shows a lot lower than expectation]. Its business profits in this third-quarter were below analysts’ estimated profit – which were less than half of estimated figure.

SM submitted its report of this quarter to the Financial Supervisory Service at 14:12 without any public announcement. According to the report, its business profits for third-quarter was 11.7 billion KRW. It was more than the last third-quarter, but a lot less than expectation of stock market. Analysts had estimated its third-quarter’s business profits to be 20~23 billion KRW.

The stock price responded immediately. It started to falling slowly right after its report, and hit the floor of the lower limit at 14:25.

[irrelevant part omitted]

Analysts at stock firms are in a state of confusion and it is known that a shower of enquiries and complaints are coming from institution investors. “We haven’t even seen the official report yet, but everyone is in panic as there are telephone calls without a break. We are not able to find out exactly why SM had such Earning Shock at the moment”, appealed a [anonymous] analyst at a firm.

It has been known that SM explained about the reason of this Earning Shock is because of a big production cost of TVXQ and Super Junior’s Arena Concerts. However, general experts insist that SM’s explanation cannot be an underlying reason. “There might have been some [serious] problems in the company because it is just too lower than expected” – commented another analyst.

SM insisted that TVXQ and Super Junior’s concerts were the reason of its bad economic performance, but it used to be considered as one of the most favourable factor of SM as most analysts estimated that “Its profits of the 3rd quarter will be  drastically increased because the results of the Arena Tour will be reflected in 3rd-quarter, not 2nd-quarter”, because about 1 million people were expected to come to the concerts in Japan in this half-year.

Due to SM’s Earning Shock, other entertainment stocks turned into a sharp fall. YG Entertainment decreased by 13.86%, JYP Entertainment, PAN Entertainment and Chorokbaem followed by 4~8%.


SK Stock Firm added, “The reason of its sharp fall is caused from a lot of difference between the market’s estimation and actual business performance. The problem was that the production cost of TVQX concerts which were known to attract half a million people became too high”.

“A company like SM, its estimated profit tends to be entirely depends on what the company says. How are we supposed to believe it in the future, after announcing less than half the business profits of the market’s expectation?”, commented a analyst at another firm.



-Minus 14.88% in a day, after earning shock-

– Entertainment stocks are more like ‘a house of cards’ in Korea, because so-called ‘K-POP invasion’ is actually inessential figure if you know how SM tried to exaggerate it by using media,  to make it as if  they conquered the world. (Think abt who is really conquering the world as a Korean singer at this moment! :P)

– Korean entertainments’ overstated media-fuss is directly related to their stock prices. They have to keep the price as much as they can, whatever it takes, with every possible way because only media-fuss can make people deluded by slick marketing.

– Therefore, it always could decrease drastically as soon as any reality is revealed. (well, which I welcome the most)

– Also it could reflect that there is no enough cash-flow at SM, based on the situation  that SM risks its neck to its stocks. (Actually SM is just lying in the court, insisting that it did nothing bad so cannot give a penny to JYJ for the compensation for damages from the lawsuit to clarify invalidity of its exclusive contract. -the compensation was set 3 billion KRW-. )

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[NEWS] SM and JYJ failed to reach agreement again – Dragged Out Again?

SM and JYJ failed to reach agreement again – Dragged Out Again?

Sep 18, 2012

 Original Link: http://news.nate.com/view/20120918n30515

SM Entertainment and the group JYJ (Jaejoong Kim, Junsu Kim and Yuchun Park) who have been in dispute regarding the exclusive contract of the Idol group TVXQ failed to find an agreement and remained as far apart as ever.

Seoul Central District Court Civil Department 47 held an arbitration date for JYJ’s exclusive contract dispute at Arbitration room #579 of Seoul Central District Court. The lawsuit was about to be ruled on Sep 13, but it was brought to arbitration by the court’s authority.

The court held an arbitration date for about an hour with Young Min Kim, the CEO of SM Entertainment, and the both parties’ lawyers in order to urge an agreement, however, the both parties turned back after finding their different stances again, having no results.

“There was no outcome at all”, said JYJ’s lawyer told StarNews, implying the arbitration was failed. He added that “We only set forth our own opinions in each stance. There was no change about the differences in opinions”.

The court again suggested the both parties to have a mutual agreement. But, it did not set any dates for next hearings, and suspended the verdict indefinitely in the manner of having enough time for agreements. Therefore, the lawsuit that has been dragged out for 3 years since 2009, not become lost in the mists without an end.

So far, there have been a number of arbitration dates since last May in order to try to reconcile their differences in opinion and the verdict date had been set soon, but the arbitration date was set after the court recommended the both parties’ mutual agreement.

JYJ filed an injunction saying “We would the court to terminate the validity of an unfair contract” in 2009, and SM Entertainment filed a lawsuit to clarify the validity of an exclusive contract in April 2010 after the court accepted the injunction. JYJ also filed a lawsuit to clarify the invalidity of an exclusive contract too. And the court rejected all injunctions filed by SM Entertainment (Objection against the injunction ruled in 2009 and an injunction to terminate the validity of an exclusive contract –between JYJ and C-JeS-.), confirming that the exclusive contract between SME and JYJ is invalid and JYJ’s independent activities are guaranteed as well as legally right.


To help your understandings:

– This is not about who wins the lawsuit, based on the fact that SM’s lawsuit (the above 2 lawsuits were proceeded at the same time) was finished before JYJ’s lawsuit. The result is already out – the contract between SM and JYJ is invalid. The main issue is now how much SM would have to pay JYJ as compensation for damages.

– ‘Suspend the verdict indefinitely’ means more like ‘urge an agreement by force, in details such as compensation for damages’.

– If the lawsuit is finished by the both parties mutual agreement: JYJ receives compensation for damages amounted by arbitration and the case would be finished without further verdict and the appeal/trial at the Supreme Court. (Arbitration results become the final)

– I cannot say further why the court keeps suggesting mutual agreements and feel absolutely disgusted. I can only guess that there is the president election in December in Korea, and the present season is easily effected by political manner as all personnel matters of officials would be changed after the election.  Some people say that Judges tend to very passive to make any verdicts during these times.

We all feel so angry but all we can do is stick together for JYJ even if it sounds depressing. Cheer Up everyone! For JYJ’s sake.

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[NEWS] JYJ and SM failed to agree on arbitration of exclusive contract and return to the court’s decision in Sep

JYJ and SM failed to agree on arbitration of exclusive contract and return to the court’s decision in Sep

Original Link: http://news.nate.com/view/20120810n25558

August 10, 2012

The arbitration between SM Entertainment, who is on a dispute regarding the idol group TVXQ’s exclusive contract, and JYJ(Jaejoong Kim/Yuchun Park/Junsu Kim) has finally ended in failure.

SM Entertainment’s CEO Young Min Kim and the lawyers of the both parties attended to Seoul Central District Court’s arbitration room 579 at 4PM on the 10th(of Aug) and mediated(arbitrated) differences of opinions.

The members did not turn up at the court. [Translators note: A plaintiff does not attend to a civil case if he/she has legal representatives to deal with a case.]  The arbitration was proceeded for about an hour and a half, and each party entred the arbitration room in turn in order to deliver their opinion to the court.

The both also seated together to discuss their opinions after this. The CEO Kim discussed with his lawyer while he was staying at a waiting room. He was unforthcoming about details, saying “I cannot say anything as it is under process at the moment”.

Before this, SM Entertainment and JYJ had had arbitration date 6 times [Translators note: All arbitration dates were made upon SM’s request. JYJ’s lawyers never asked any.] to bridge the differences from May 2011, but the hearings at court recommenced as they failed to reach an agreement.

The hearing was on May and there were still too many difficulties between the both parties, so final ruling date was due to be announced, but they had one more arbitration date as the court suggested a mutual agreement. [Translator’s note: Civil Court does its best to solve a case with a mutual agreement if possible. This is why the court accepted so many arbitration requests of SM.]

However, the both parties failed to bridge their differences again.
JYJ’s legal representative informed us that “There are too wide differences of opinions. We could not make an agreement and will have the final ruling date by the court around Sep 13”. The lawyer continued, “SM’s stance is just to ‘cover(forget about the matter)’ over the past and we expressed our opinion that we have to technically thrashed the things out such as settlement of accounts(payment) and other things which should be clarified by the law. The both parties’ opinions are being divided over the issue, but the court suggests a mutual agreement or mediation until the court announces it final decision”.

Judging from this, it is highly expected that the court would decide its final ruling regarding the 3-year lawsuit. SM kept saying “We don’t have anything to say for now” after press’s questions after the arbitration.

JYJ had applied for an injunction to terminate the validity of their unfair exclusive contract in 2009 and the court accepted it in favour of JYJ. SM filed a lawsuit to clarify validity of the exclusive contract (saying its contract had no problems) in Apr 2010 against the decision and JYJ also filed a lawsuit to clarify invalidity of the exclusive contract.

In Feb 2011, the court rejected SM’s objection against the decision of the injunction, and also rejected SM’s injunction to terminate exclusive contract (between JYJ and C-JeS Entertainment) too. With those decisions, the court made clear that the exclusive contract between the two parties(SM and JYJ) was invalid, and JYJ’s independent entertainment was guaranteed.

To Add the comments of JYJ’s legal representative:

JYJ’s lawyer also said “We thought SM had changed its previous position a little bit because it was SM who requested this arbitration, but it did not so. The arbitration failed to reach an agreement as the both parties could not bridge the differences”. “The court will set the date for its final ruling between Sep 6 and Sep 13. The court just said that it would like to suggest a mutual agreement if possible before its final decision on the case”, the lawyer added.
Original link quoted: http://news.nate.com/view/20120810n25991

“SM is not accepting the invalidity of the exclusive contract which we demand”, explained the legal representative of JYJ.
Original link quoted: http://news.nate.com/view/20120810n25537


Well I believe it’s not surprising, isn’t it? The arbitration can never reach an agreement as SM only wants to gain time so that the result comes as late as possible to prevent a decrease of its stock prices.
SM said ‘Let’s cover over (forget about) the past’, which is completely nonsense.
Would you ever be able to forget everything about what the three members have been through so far?
You might see how stubborn it is, not to give a penny of compensation to JYJ, which is basically set as 3 billion KRW as the value of lawsuit. (I even doubt that SM has that amount in cash as its financial structures entirely depends on bubble stock prices.)

It also still insisting that it cannot accept the invalidity of the contract at all, which was already decided invalid under the court’s decision on the injunction in 2009.
(Which means, SM has been insisting that it has nothing to be blamed, so it cannot pay a penny of money to JYJ for 3 years. Pathetic, huh?)

It is known that the court shall set the date of final decision in Sep, so sadly we have to wait another dull time to see its end.

PS. Please Please don’t be confused by any rumors which have no clear evidences. 
I know there have been so many stories about the lawsuit, but the process is NOT OPEN PUBLIC. 
Only the lawyers of the both parties can know the exact details. 
The only thing public can know is dates  and simple basic details provided by the court’s website. 
That’s why I did not say anything until something officially comes out. 
If you see any stories without facts, just ignore it and wait until something is officially announced.
Then you shall be less stressful! 🙂

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