Official statement of C-JES Entertainment regarding FTC’s correction order against SM Entertainment 2013-07-24 C-JES Entertainment hereby announces its position with regard to the corrective order of Fair Trade Commission to ban SM Entertainment and Korea Popular Culture and Art Federation from obstructing JYJ’s performances as singer. (full statement of CEO Baek Chang-ju) I would like to express appreciation to Fair Trade Commission which has conducted thorough investigations for more than three years in order to root out unfair practices by securing evidence to prove the organized, unilateral moves to keep JYJ from TV shows made by major entities in the cultural industry, such as SM Entertainment, Korea Popular Culture and Art Federation and Korea Entertainment Producers Association. FTC’s investigations brought to light the fact that SM Entertainment abused its monopolistic and dominant position in the entertainment business, forcing disadvantages into those who do not follow its stance on a number of occasions, and thus violated the Fair Trade Act. The corrective order of Fair Trade Commission raised the alarm against the abusive practices by predominant players in the cultural industry, which go against the creative economy policy of the government. In addition, the development of Korea’s entertainment industry represented by the “Korean Wave” will be sustained only if the creativity and diversity of all participants are respected and assured. It should no longer be allowed that only a few “powerful” entities wield predominant influence across the industry. In that sense, the Corrective Action Order Act which was announced today is sure to serve as the foundation on which the Korean Wave can take another leap forward into the world. As a matter of fact, JYJ had to continue to fight unfair pressures even after its dispute with the former agency was brought to an agreement by court mediation in April. It is so obvious that JYJ still faces disadvantages, as seen in a recent, unilateral notice from the album distributor and JYJ rendered no opportunity to appear on terrestrial TV programs even after it released a new album. This is such a shameful reality of our society. However, I believe such policies and institutions as the Corrective Action Order Act will help put JYJ on a level playing field going forward. JYJ’s opinions on the corrective order of FTC “We are grateful for the decision by Fair Trade Commission. Since 2009, we have been in an uphill battle with seemingly no end in sight. Yet, the announcement made by FTC today gave us a great deal of comfort that things may finally improve bit by bit. We hope the corrective order will enable us to perform entertainment activities in a fair and equitable environment and so can young entertainers who will join the industry in the future. The end of this pitch-dark tunnel may still be a long way off but we saw a gleam of light from afar today. We will keep walking towards the light and make the best effort in every moment so as to pay back with great performances.” < Reference 1: JYJ’s litigation and a FTC announcement > On July 31, 2009, the three members of JYJ applied for an injunction of Seoul Central District Court to suspend the validity of their exclusive contract with SM Entertainment. They insisted the unfair contract should be nullified on the ground that the contract period is so long (13 years) as to breach established social rules, profit-sharing structure is in excessive favor of the agency and they are deprived of freedom in performing activities during the contract period. On Oct. 29, 2009, Seoul Central District Court made a decision to accept their argument for the invalidity of the contract (Seoul Central District Court 2009 KA-HAP 2869). Since then, the Court has confirmed the nullity of this unilateral, forced contract on a number of legal battles till April this year. In the meantime, in October 2012, Fair Trade Commission established and announced “standard rules for business transaction among entertainment management agency, entertainer(trainee) and production agency” in order to formulate a fair environment in the entertainment management industry. Since then, there has been improvement on the perception of participants in the entertainment business, including management agencies, thus setting the foundation that those who newly join the entertainment industry were assured the legal protection of their status and freedom in entertainment activities. In addition, FTC’s corrective order against unfair practices announced today reaffirmed the fact that the dispute between JYJ and its former management agency served as a decisive trigger to resolve unfair practices deeply-rooted in the entertainment industry and considerable improvements were made therefrom. On July 31, 2009, the three members of JYJ applied for an injunction of Seoul Central District Court to suspend the validity of their exclusive contract with SM Entertainment. They insisted the unfair contract should be nullified on the ground that the contract period is so long (13 years) as to breach established social rules, profit-sharing structure is in excessive favor of the agency and they are deprived of freedom in performing activities during the contract period. On Oct. 29, 2009, Seoul Central District Court (judge: Park Byeong-dae) made a decision to accept their argument for the invalidity of the contract. (Seoul Central District Court 2009 KA-HAP 2869) SM Entertainment filed an objection to the court injunction on April 12, 2010. Yet, the 50th Civil Suit Division of Seoul Central District Court (judge: Choi Sung- joon) dismissed its objection on Feb. 15, 2011, which decision confirmed once again that the exclusive contract between the three members of JYJ and SM Entertainment was unfair and void, and accordingly reaffirmed the original court injunction (Seoul Central District Court 2010 KA-HAP1245). On Feb. 21, 2011, the 51st Civil Suit Division of Seoul Central District Court (judge Kim Dae-woong) acknowledged the fact that SM Entertainment has obstructed the entertainment activities of the three JYJ members, including appearance on TV programs, and issued an indirect compulsion order (2010 TA-KI 4495) that SM Entertainment shall not hinder their activities and pay 20 million won each time it violates this court order. As shown above, the court made a voluntary arbitration to terminate the exclusive contract as of July 31, 2009 and as a result JYJ was assured full freedom of activities and independence from SM Entertainment. With that, all legal disputes between the two parties came to an end.