K-pop company stocks fall after report of antitrust investigation

Shares of K-pop management companies such as HYBE, SM Entertainment and YG Entertainment fluctuated after South Korea's antitrust watchdog stepped in.

Shares of K-pop management company SM Entertainment fell 1.5% on the morning of July 5. (Source: Reuters)

Shares of K-pop management companies fell on Thursday after South Korea's antitrust watchdog began an investigation into potential violations of subcontracting rules when outsourcing the production of albums and fan goods, Yonhap news agency reported.

According to Yonhap , the Korea Fair Trade Commission (KFTC) sent investigators to the offices of HYBE, SM Entertainment, and YG Entertainment on July 4.

The KFTC is looking into whether these companies engaged in any practices with subcontractors such as oral contracts without writing, unfair contracts or late payments. No specific charges were given.

The KFTC declined to comment on any specific investigation.

HYBE, SM and YG did not immediately respond to requests for comment.

Shares of HYBE, the management company of K-pop sensation BTS, fell 2.1 percent in early morning trading. Shares of SM Entertainment and YG Entertainment also fell 1.5 percent and 0.4 percent, respectively, as of 9:15 a.m. local time.

HYBE reported 410.6 billion won (US$315.9 million) in revenue from January to March, with 44.9 percent coming from album sales and 16.8 percent from fan goods and intellectual property, according to a report by Shinhan Investment & Securities on July 4.

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