EXO Sub-Unit CBX Calls for Full-scale Investigation Amidst Contract Dispute with SM Entertainment
Members of EXO's subunit ChenBaekXi (CBX), Baekhyun, Xiumin, and Chen are still locked in a contract dispute with their agency, SM Entertainment. ChenBaekXi has taken a bold step in filing a complaint against SM with the Fair Trade Commission (FTC), but SM has shown signs of compromise, pledging to provide settlement data.
On behalf of ChenBaekXi, attorney Lee Jae-hak from law firm Lynn filed a complaint against SM for abuse of its superior trading position with the FTC on May 4th. The lawyer revealed that despite the FTC's orders for correction against SM in October 2007 and January 2011, unfair contractual practices continue unabated at SM. He asked for a stern investigation into SM's breaches and swift corrective measures, as well as a full-scale investigation into the exclusive contracts of SM artists.
Lee emphasized that his clients, the three artists of ChenBaekXi, have been consistently harmed by unfair contracts that do not reflect the corrective measures ordered by the FTC. He also pointed out that non-compliance with corrective orders is a criminal offense under the Monopoly Regulation and Fair Trade Act, punishable by up to two years in prison or a fine of up to 150 million won.
The lawyer also accused SM of ignoring the FTC's corrective orders by applying uniform extended contract terms, citing reasons like overseas promotions that were not confirmed at the time of contract signing. He explained that the FTC had pointed out this unfair contract condition in a supplementary agreement in 2011 and SM continues to use this template.
After receiving the FTC's corrective orders, SM should revise any contracts that violate these orders, Lee stressed. Despite this, he said SM has repeatedly proposed and signed unfair supplementary agreement terms in its exclusive contracts with Baekhyun, Xiumin, and Chen, which were signed in 2010 and 2011, even after receiving the FTC's corrective orders in 2011.
On June 5th, SM withdrew a step back, promising to provide copies of settlement data to the three artists and their representatives, provided they will not use the information for unjust purposes. The agency also explained the situation to other EXO members, seeking their consent or understanding about providing copies of settlement data.
SM also mentioned their continued commitment to negotiating with the artists and ensuring that EXO's activities are not affected. They emphasized that the termination of contracts cannot simply be based on unilateral notifications with insufficient grounds.
SM further underlined that the settlement data contains various confidential information related to each artist, including specific activity details, settlement rates and methods, contract fees, etc., which should not be exposed to third parties or competitors.
SM has also been apprehensive about the potential intervention of a third party, suspecting that the artists' representatives may have ulterior motives in asking for copies of the data. They expressed concern about whether the artists have signed a dual contract that contradicts their new contracts with a third party, and whether the representatives are solely representing the three artists. These questions were met with silence from the representatives.
In the meantime, ChenBaekXi officially notified SM of their contract termination through their attorney on May 1st, accusing SM of a lack of transparency in settlement details and forcing long-term contracts under the pretext of overseas activities. SM accused external forces of trying to shake ChenBaekXi, vowing not to stand by while those solely seeking financial gains move against their artists.
The situation is being closely watched to see if this ongoing conflict will be somewhat assuaged following these statements from both parties.
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